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CHINA. No. 1 (1914).

FURTHER CORRESPONDENCE

RESPECTING THE

AFEAIES OF CHINA.

[In continuation of " China, No. 3 (1913) " : Cd. 7054.]

Presented to both Houses of Parliament by Command of His Majesty.

April 1914.

>oH: , "B-fct , To

-fe ( Q -vi

; 1

LONDON:

FEINTED UNDEE THE AUTHOEITY OF HIS MAJESTY'S STATIONEEY OFFICE

By HAEEISON and SONS, 45-47, St. Martin's Lane, W.C,

Printers in Ordinary to His Majesty

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or from the Agencies in the British Colonies and Dependencies,

the United States of America, the Continent of Europe and Abroad of

T. FISHEE UNWIN, London, W.C.

1914.
[Cd. 7356.] Pride Id.

TABLE OF CONTENTS.

No.

Name.

Date.

Sr EJECT.

Page

Sir J. Jordan

» >»

J 3

»> »

i> "

Dec. 18, 1912

26,

27,

8
9

10
11

Admiralty . .

To Sir J. Jordan
Sir J. Jordan

i> >>

» i>

Jan. 3, 1913

14,

20,

» !>

Feb. 14,
15,

7,
11,

12,

Does not consider that additional British
troops can at present be dispensed with
in either the North or South China
command

Keports the restoration to the Chinese
authorities of the balance of the securities
handed over to the senior consul at
Shanghai by the former Taotai after the
deduction of certain liabilities . .

Transmits a telegram addressed by the
Ministry of Communications to certain
Chinese diplomatic representatives and
consular officers respecting the election
of representatives in the Senate of Chinese
chambers of commerce and other bodies
established abroad

Transmits a note from the Wai-chiao Pu
respecting the payment in sterling in
London of sums due on account of the
Chinese foreign loans, and reports reply
returned thereto

Reports an attack by armed robbers ou a
party of Canadian missionaries near
Luchou and steps taken with regard to
the matter Transmits a note from the
Wai-chiao Pu on the subject

I'ranamits a letter to the Hong Kong and
Shanghai Bank and the Ghaxtered Bank of
India, Shanghai, and a note to the Wai-
chiao Pu respecting the distribution of the
customs surplus available for the pay-
ment of the China indemnity . .

Transmits a telegram from the Commander-
in-chief, China, respecting the withdrawal
of troops from Canton and a part of the
patrol on the West River

Appnoves action reported in No. 6

Transmits a summary of the state of affairs
in the provinces during the last quarter of
1912

Refers to No. 6. Transmits correspondence
with the Wai-chiao Pu respecting the
method to be adopted in remitting to the
Powers instalments of the China indemnity

Transmits a summary of six Presidential
orders. Draws attention to the substitu-
tion of Foreign Affairs delegates for
Taotais for the purpose of communicating
with His Majesty's consuls

Refers to No. 10. Transmits a letter from
the Hong Kong and Shanghai Bank
reporting the payment of the British share
of indemnity arrears to February 1912,
and enclosing a statement (jf the amount
remitted to London on account of the sum
due for the half-year ending 31st De-
cember, 1911

>
12

[1089]

TABLE OF CONTENTS.

Ill

No.

Name.

Date.

Subject.

Page

Sir J. Jordan

••

Mar. 4, 1913

Refers to No. 3. Reports the election of
senators to represent Chinese communities
abroad

Gives a summary of the report of the Inter-
national Bankers' Commission for the
quarter ended 31st January last

n )'

• •

Reports withdrawal of Indian troops from
Shamieii

J7.

Sir E. Goschen . .

20,

Transmits a smnmary of a memorandum on
the development of Kiaochow from
October 1911 to October 1912 ...

Sir J. Jordan

Telegraphic

Apr. 3,

Reports probability of a struggle between
Yuan Shih-kai and the Kuomintang

» )» • •

Telegraphic

Both Houses of Parliament have been
opened . . . . . . • .

v/ 19

1) » ••

Mar. 27,

Transmits a memorandum addressed to the
Wai-chiao Pu respecting the objections of
His Majesty's Government to the election
to the Assembly of deputies representing
Chinese resident in British colonies

5) >? • •

• •

Apr. 8,

Refers to No. 6. Transmits correspondence
with the International Bankers' Commis-
won at Shanghai respecting the modifi-
cation of the arrangement for the
apportionment of surplus customs revenue
for the current year . . . . . .

»J )» • •

• •

Refers to No. 18. Transmits a note from
Wai-chiao Pu stating that the Chinese
Parliament has been inaugurated, and
reports that Yuan Shih-kai will probably
be elected President . .

» » ••

••

May 3,

Transmits a summary of the state of affairs
in the provinces dui'ing the first quaiter
of 1913

,» H • •

• •

Transmits a note from Wai-chiao Pu stating
that the Cninese Republic has been
recognised by the United States Govern-
ment

»I M ••

• •

»,

Transmits Yuan Shih - kai's reply to
President Wilson's message of recogni-
tion

2fi-

'/25

!> ))

■ «

Transmits correspondence with the Wai-
chiao Pu respecting the position of
foreign merchants in Peking . .

)» » • •

••

13,

Transmits a memorandum from the Wai-
chiao Pu on the subject of foreign
loans

1) 15 • •

••

18,

Reports the election of officers of the
National Assembly. The Republic has
been recognised by Mexico and Cuba

1» )1 • •

• •

19,

Reports steps taken to deal with agitation in
the south

30_

\/29

Mr. Alston

June 7,

Refers to No. 19. Transmits further corre-
spondence with the Wai-chiao Pu respect-
ing the election to the Assembly of
representatives of Chinese resident
abroad

298542

TABLE OF CONTENTS.

No.

Name.

Date.

SUBJKCT.

Page

Mr.

Alston

-•

June 12, 1913

Reports the dismissal of the Tutu of Kiangsi,
and discusses possible consequences

)j ••

Telegraphic

30,

Chinese Government desire to pay off arrear
of indemnity up to the end of 1912, and
request to be informed of amount due

To Mr. A Iston

Telegraphic

July 3,

Refers to No, 31. Informs of amount due. .

Mr.

Alston

••

15,

Refers to No. 30. Reports collision between
Kiangsi troops and northern forces

))

« ••

Telegraphic

16,

The Tutu of Anhui has been invited by the
troops to return. The Tutu of Kiangsi
is leading the revolt . .

,11

»)

Telegraphic

17,

The insurrectionary movement seems to be
spreading

ij • •

Telegraphic

18,

The revolt is a militaiy one led by the dis-
missed Tutus. It is at present confined to
Kiangsu and Kiangsi.,.

»»

Refers to No. 14. Gives a summary of the
report of the International Bankers' Com-
mission for February and March 1913,
showing the appropriation of revenue
received by the Maritime Customs

» ••

••

Gives a summary of the Budget for the first
six months of 1913

Telegraphic

20,

Fukien and Kuang-tung have declared their
independence ..

>» ••

Telegraphic

21,

Reports General Li-yuan-hung's views on
the situation. .

41
42

» » • •

Hong Kong and
Shanghai Bank

Telegraphic

• •

21,
22,

Shanghai arsenal is still held by northern
troops

Transmits a telegram from the Peking repre-
sentatives authorising the groups to pay
the indemnity arrears up to 3l8t December,
1912 ..

36
36

Mr.

Alston

Telegraphic

24,

Attack on Shanghai arsenal repulsed. No
decisive action fought at present

n " "

Telegraphic

29,

Reports on the situation in Kiangsi

:»

Telegraphic

30,

Reports further on the situation in the
south

))

i> " •

• •

16,

Refers to No. 38. Transmits a statement of
estimated expenditure and receipts for
the first half of the current year as sub-
mitted to the Audit Bureau

1) • •

Telegraphic

Aug. 3,

Reports operations in Yang-tsze Valley
generally favourable to Central Govern-
ment

»i • •

••

July 21,

Reports progress of events in Yang-tsze
Valley. Transmits a memorandum from
the Wai-chiao Pu explaining attitude of
Chinese Government towards the crisis . .

»»

)» • '

• «

25,

Transmits a report from the military attache
to His Majesty's Legation at Peking
respecting the military situation on the
Yang-tsze

i»

n • •

Telegraphic-

Aug. 9,

Reports further on the situation in the
Yang-tsze Valley and at Canton

TABLE OF CONTENTS.

No.

Name.

Date.

Subject.

Page

Mr. Alston

Colonial Office
Mr. Alston

56 ' Admiralty. .

57 I Mr. Alston

58 I Sfa- 0. Greene

59 I n w

60 ! Mr. Alston

61 iSir G. Greene

62 „ „

63 !I !)

66
67

» It

To Mr. Alston
Sir 0. Greene

68 i Mr. Alston

69 Sir C. Greene

: July 28, 1913

Telegraphic! Aug. 13,

14,

relegraphic 15,

18,

. . [Telegraphic

. . Telegraphic

Telegraphic

• • • ■

B • I • •

10891

23,
Sept 6,

7,
Aug. 23,

Sept 9,

11,
14,

16.
6,

24,
10,

12,
12,

Refers to No. 48. Reports further on Mtua-
tion in South China . . . . . . .

Reports capture of Woosung forts

Transmits a telegram from the Governor of
Hong Kong respecting the situation at
(Janton

Reports that the rebellion is gradually col-
lapsing

Reports that the Diplomatic Body have been
unable to accept various proposalfi of the
Chinese (lovemment affecting foreign
interests in connection with the disturb-
ances in China

Transmits an extract from a letter from the
Commander - in - chief, China, respecting
events on the Yang-tsze

Reports that a critical situation has arisen at
Cheiigtu

Excitement has been caused by report that
some Japanese have been killed at Nan-
king

The Director of the Political Division of the
Foreign Office has been assassinated

Gives a summary of the report of the luter-
iiational Bankers' Commission, showing
the appropriation of revenue received by
the Maritime Customs for the quarter
ended 30th June last . .

The Japanese consul at Nanking has not yet
reported on the killing of Japanese owing
to illness, ami sume delay is expected

Reports strong feeling aroused in Japan by
Nauking incident

The Chinese Government have undertaken
to comply with practically all the demands
of the Japanese Government in connection
with the Nanking incident

The Japanese Government have instructed
the Japanese Minister at Peking to press
f^<- 'irompt action by China

for

Reports conversation with the Vice- Minister
for Foreign Affairs on the Nanking inci-
dent

Requests his views as to a possible reduction
of the British garrison in North China . .

Refers to No. 65. Reports on the assassina-
tion of Mr. Abe and the attitude of the
vernacular press towards the Nanking
incident

Transmits a despatch from His Majesty's
consul at Nanking describing the state of
affairs in the city subsequent to the entry
of the northern troops, and stating that
some Japanese have been killed

Reports that demonstrations have taken
place at Tokyo as a result of the Nanking
incident

TABLE OF CONTENTS.

No. Name.

Date.

Subject.

Page

Mr. Alston

Telegraphic

Sept. 29, 1913

Reports that Chang has called on the
Japanese consul at Nanking to apologise,
and that the incident is being settled

)? V

Telegraphic

29,

Nine hundred of Chang's soldiers have saluted
the Japanese consulate, and the demands
of Japan have been complied with

») »

Telegraphic

Oct. 4,

The election of the President is fixed for
6th October. Proposes to recognise the
Chinese Republic after the election has
been notified to Uis Majesty's Legation . .

To Mr. Al8(on

Telegraphic

Approves proposal in No. 72. He should
con\'e}- to the President a message of
congratulation on behalf of His Majesty's
Government . .

Mr. Alston

• ■

Sept. 19,

Transmits a Presidential Order providing
for the punishment of the persons
lesponsible for the kilHng of Japanese at
Nanking

»» »i ■•■•

* ■

22,

Reports that the armed resistance of the
opponents of Yuan Shih-kai has been
crushed. Discusses present and future
situation

'» v

Telegraphic

Oct. 6,

Yurin Shih-kai has been elected President

)) »

Telegraphic

12,

Refers to No. 66. Deprecates any reduction
of the North China garrison at present . .

5> »

•■

Sept. 29,

Reports the formation of a new Cabinet
under Hsiung Hsi-ling

To War Office

••

Oct. IS,

Transmits No. 77. Concurs in Mr. Alston's
view

Mr. Alston

•■

11,

Reports on the election of Yuan Shih-kai as
first President of the Chinese Republic . .

>, "

••

11,

Gives an account of Yuan Shih-kai's
inauguration, and transmits his inaugural
address . . . . . . '

Further Correspondence respecting the Affairs of China.

[In contimiation of " China, No. 3 (1913) " : Cd. 7054.]

No. 1.
Sir J. Jordan to Sir Edward Grey. — (Received January 2, 1913.)

Sir, Peking, December 18, 1912.

I HAD the honour to receive your despatch requesting to be furnished with my
observations regarding the proposals made by the War Office for the trooping season,
September 1913 to March 1914.

As I had the honour to report in my tele,gram of the 6th instant,*' I do not
consider that it would be wise to dispense with any of the additional troops now
serving in China. It is almost impossible to make a forecast of what troops may be
required in China nearly a year hence, but I have no hesitation in saying that, for the
present at any rate, no portion of the forces in the North China command could be
safely removed.

With regard to the southern command, it would seem from the information in my
possession that the retention of the additional British troops in that quarter is as
necessary as it is in the north.

I have, &c.

J. N. JORDAN.

No. 2.

Sir J. Jordan to Sir Edward Grey. — {Received January 11, 1913.)

Sir, Peking, December 26, 1912.

WITH reference to my despatch of the 17th December, 1911, t I have the honour
to report that in June last the Chinese Government delegated full authority to the
then Tutu of Shanghai, Ch'en Ch'i-mei, to settle with the consular body the terms
under which the former Taotai's securities held in trust by the senior consul would be
restored to the Chinese authorities. The Diplomatic Body sanctioned a proposal for
drawing against these securities to the extent of paying ofE the principal (without
interest) due on outstanding native orders and certain mixed court charges, the
remainder of the securities to be restored to the Tutu.

In August, with the departure from Shanghai of Ch'en Ch'i-mei, the Wai-chiao
Pu informed me that they had transferred his authority to the Tutu of Kiangsu. Some
difficulty arose at first owing to the desire of the former Tutu Liu and Dr. Sun Yat Sen
to take part in the negotiations. The consular body, however, dealt direct with the
local commissioner of foreign affairs, Mr. Ivan Chen, ^vho had been delegated by the
Kiangsu Tutu to affect a settlement. This was finally accomplished at the end
of November, when the required conditions were carried out. After reahsation of a
number of the securities, a sum of 1,083,976'51 taels was expended on the payment of
dishonoured native orders in the hands of foreign merchants, principally British ; and
a sum of 150,000 taels was retained for mixed court and land office expenses. A full
statement of accounts, together with the remainder of the securities and a balance of
1,431"32 dollars and 58,671-91 taels in cash, were handed over to Mr. Ivan Chen by
the senior consul on the 23rd November. Much satisfaction has been caused by the

* See "China, No. 3 (1913)," No. 71. t See "China, No. 3 (1912)," No. 22.

[1089] B

final settlement of ttis troublesome question, which has been outstanding for upwards
of two years, and has involved a great deal of time and labour.

I have, &c.

J. N. JORDAN.

No. 3.

Sir J. Jordan to Sir Edward Grey. — {Received January 20, 1913.)

Sir, Peking, December 27, 1912.

I HAVE the honour to transmit to you herewith a translation of a telegram
addressed by the Ministry of Communications to the Chinese diplomatic representatives
in the United States, Great Britain, and Japan and to certain consuls-general on the
subject of the election of representatives in the Senate of the chambers of commerce
and other societies formed by Chinese residing abroad.

I have, &c.

J. N. JORDAN.

Enclosure 1 in No. 3.

Extract from the " Gazette " of December 17, 1912.

(Translation.)

Telegram from Ministry of Indtistry and Commerce to diplomatic representatives in
the United States, Great Britain, and Japan, and the consuls-general at Singapore,
Batavia, and Vladivostock, for transmission to the consuls at the various ports.

To the consuls at the various ports : —

The laws for the election of members to the Senate, and the regulations for putting
the above laws into effect, have already been communicated to you by telegraph. On
the 8th instant detailed regulations were published, which provide that the members
of the Electoral College of Chinese resident abroad shall be elected by the Chambers
of Commerce, Chinese societies, Chinese clubs, and literary associations formed by
Chinese resident abroad. The elections shall be conducted in tlie same manner as
is customary for the election of president or other officer of such Chamber of Commerce,
society, &c., and the person elected must be possessed of the following qualifications : —

1. He must be a Chinese male subject of 25 years of age or upward.

2. He must be the owner of movable or immovable property to the value of
500 dollars or upward.

3. He must have none of the disqualifications enumerated in article 6 of the
Election Laws of the House of Representatives.

On the same day an order was issued dealing with the election of members to the
Senate by the Electoral College of Chinese resident abroad, and providing that the
election of such jnembers should take place on the 10th February in the second year
of the republic.

We have, therefore, to order you to make careful enquiries and forward by
telegraph to this Ministiy without delay for record a list of all the Chinese societies,
Chinese clubs, and literary associations foimded before the publication of the electoral
laws, that is to say, before the 10th August of 'the first year of the republic.

You will further instruct the varioiis bodies that they are to carry out the election
of members of the Electoral College in all respects similarly to the election of ofiicers
of such clul) or association, and that they must not allow such election to develop into
an open election among the Chinese resident in the port in question.

You will report by telegraph from time to time, and thereby show proper respect
for the importance of the elections — Ministry of Industry and Commerce.

No. 4.
Sir J. Jordan to Sir Edward Grey. — (Received January 20.)

Sir Peking, January 3, 1913.

I HAVE the honour to forward to you herewith a translation of a note from the
Wai-chiao Pu on the subject of the payment in sterling in London of sums due on
account of the foreign loans of China.

The Ministrjr of Finance, realising the loss on exchange caused to China by the
present system of paying out large sums in silver at Shanghai, desired to substitute
for that system an arrangement whereby the service of the foreign loans could be
effected on the due dates by sterling payments in London. After considering the
matter, the Diplomatic Body decided that the question was one which was regulated by
the several loan agreements, and could therefore only be settled by direct arrangement
with the holders of the bonds. This decision was accordingly conveyed to the
Wai-chiao Pu on the 2nd instant.

I have, &c.

J. N. JORDAN.

Enclosure in No. 4.
Wai-chiao Pu to Sir J. Jordan.

(Translation.)

Sir, Peking, November 28, 1912.

IT has hitherto always been the practice for China, when making payments in
respect of her foreign loans, to do so in silver, delivering it at the current sterling
rate of exchange, for transmission, to the Shanghai branches of the various banks
concerned.

The Ministry of Finance now propose, in order to avoid loss by exchange, to make
payments at the due dates in sterling to the correspondents of the several banks on
the spot in London, instead of having to deliver for transmission through the [three
banks in Shanghai.

I venture to think their Excellencies the foreign representatives at Peking will
readily approve an economical scheme of this nature, and have the honour, therefore,
M. le Doyen, to request the favour of an early reply from the Diplomatic Body to
facilitate the issue of instructions to the Inspector-General, the Ministry of Finance,
and the banks concerned to concert the necessary measures. I !-

In regard to last year's joint scheme in eight articles for the appropriation of
customs revenues for the service of foreign loans, I have the honour also to state that,
with the exception of the slight modifications occasioned by the procedure suggested
above, that scheme will continue to have effect.

I have, &c.

(Seal of Wai-chiao Pu.)

No. 5.

Sir J. Jordan to Sir Edward Grey. — (Received January 30.)

Sir, Peking, January 14, 1913.

I HAVE had the honour to report by telegraph the attack by armed robbers
near Luchou on a party of Canadian Methodist missionaries. The attack which
took place on the 2nd January resulted in the death of John JoUifFe, the infant
child of one of the missionaries. One of the robbers was captured during the
attack and strong representations were made to the local authorities by the acting
British consul-general at Chengtu, urging them to adopt energetic measures for the
capture of the remaining members of the gang and for the general suppression of
brigandage in the district. In an interview with the Minister for Foreign Affaire on
the afternoon of the 8th instant, I called his attention to the facts of the case and on
the following day I addressed an official memorandum to the Wai-chiao Pu requesting
that the most stringent instructions might be sent to the provincial authorities to effect
the capture of the culprits and to deal with the case in a prompt and effective manner.
1 also instructed the acting British consul-general at Chengtu to send a representative
[1089] . B 2

to the scene of the crime and to hold an inquest on the body of the murdered child.
He has since informed me that the representative in question was leaving C^hengtu on
the 10th instant and was being provided with an escort by the Provincial Secretary
for Foreign Affairs. The latter had also called in person at the consulate and had
expressed his regret at the commission of the crime.

I have now received from the Wai-chiao Pu a memorandum, translation of which
I have the honour to enclose herewith, containing expressions of regret on behalf of the
Chinese Government and informing me of the instructions sent to the provincial
authorities for the capture of the robbers responsible for the murder.

I have, &c.

J. N. JORDAN.

Enclosure in No. 5.

Note communicated to Sir J. Jordan hy Wai-chiao Pu.
(Translation.)

THE Wai-chiao Pu were apprised by His Majesty's Minister in person of the
shooting by robbers in Szechuan of the child of a British missionary proceeding from
Chungking to Chengtu, and Sir John Jordan requested them to send instructions for
the punishment of the criminals. They at once telegraphed to the Tutu of the province,
whose reply states that, according to a telegram from the magistrate of Fu Shun
district, a British missionary, Jolliffe, with his family, entered his jurisdiction under
escort provided in Lu Chou. Their boat, moored at Huang Ko Wan, was raided by
robbers in the middle of the night of the 3rd instant. Dr. Cox, travelling with the
party, opened fire and killed one of the robbers. The rest of the gang evaded arrest
by shooting, and mortally wounded the missionary's infant son, John Jolliffe. Hearing
the noise militia guards collected and captured one, T'ang Hsing-fa, the leader of the
robbers, the rest of whom made good their escape. The Tutu adds that he is
instructing the district magistrate to have the captured robber, T'ang Hsing-fa, brought
up for trial, and deal with him with the utmost rigour ; he is also sending immediate
orders throughout the province to take all possible steps for the arrest of the escaped
robbers, who must be captured and brought to trial without fail.

The Wai-chiao Pu regard with the deepest regret this encounter of British
missionaries with robbers in Fu Shun district, and the wounding, mortally, of the
Rev. Mr. JollifTe's infant son. They are telegraphing to the Tutu of Szechuan to effect
as soon as possible the capture of the escaped robbers. Meanwhile they have the honour
to communicate the above information.

Peking, January 11, 1913.

No. 6.

Sir J. Jordan to Sir Edward Grey. — (Received February 4.)

Sir, Peking, January 20, 1913.

IN my despatch of the 30th January, 1912,* I had the honour to forward a
copy of the instructions issued by the Diplomatic Body to the International Bankers'
Commission at Shanghai, which was formed to arrange for the due payment out of
customs revenues of the foreign debt charged thereon. Article 6 of these instructions
reads as follows : —

" If normal conditions are not restored by the end of 1912, then at that time an
account shall be taken of the surplus available for the indemnity, and such account
shall be sent to the Diplomatic Body for their decision as to its disposal."

The secretary of the International Bankers' Commission forwarded to me, as dean,
an account dated the 4th January, 1913, showing a balance on the 31st December, 1912,
to the credit of the combined loan service accounts in the three custodian banks of
Shanghai of 10,268,202'59 taels, a sum which was subsequently corrected to
10,273,682-09 taels. On receipt of this account on the 8th instant, I immediately
circulated it among my colleagues and called a meeting for the 16th instant to discuss
the disposal of this surplus.

* See " China, No. 3 (1912)," No. 113.

The arrangements for giving effect to the decision eventually adopted by the
Diplomatic Body are recorded in two documents, copies of which are enclosed
herewith, the first being an identic letter of instructions addressed to the members of
the Bankers' Commission by their respective Ministers, and the second a memorandum
from me as dean of the Diplomatic Body to the Wai-chiao Pu.

I have, &c.

J. N. JORDAN.

Enclosure 1 in No. 6.

Sir J. Jordan to the Managers of the Kong Kong and Shanghai Banking Corporation
and the Chartered Bank of India, Australia, and China, Shanghai.

Sir, • Peking, January 18, 1913.

WITH reference to the letter dated the 4th instant* from the secretary of the
International Bankers' Commission I beg to inform you that the Diplomatic Body have
decided as follows : —

The balance to the credit of the maritime customs revenue on the 31st December,
together with the balance to the credit of the native customs revenue on the same date,
is to be remitted in the usual way to the various Governments in proportion to the sums
due to them on account of the indemnity, for so many complete months as the sum may
be sufficient to cover, with compound interest at 4 per cent, per annum.

A communication to the above effect is being addressed to the Chinese Government
with the request that the necessary instructions may be issued to the Inspector-General
of Customs for transmission by telegraph to the Commissioner of Customs at Shanghai.

You win be good enough to take note of this communication and give effect to the
decision regarding the present balance without delay.

I am, &c.

J. N. JORDAN.

Enclosure 2 in No. 6.
Dean's Memorandum to the Wai-chiao Pu

THE dean begs to refer the Wai-chiao Pu to article 6 of the eight articles arranged
between the Diplomatic Body and the Wai-wu Pu in January, 1912, for devoting the
customs revenues to the service of the foreign debt secured thereon. This article
provides that if normal conditions are not restored by the end of 1912 then at that time
an account shall be taken of the surplus available for the indemnity, and such account
shaU be sent to the Diplomatic Body for their decision as to its disposal.

The International Bankers' Commission, having now reported that the surplus so
available amounts to a sum of 10,273, 682"09 taels, the Diplomatic Body has decided
that this sum, together with the balance of the native customs revenue on the
31st December, is to be remitted in the usual way to the various Governments in pro-
portion to the sums due to them on account of the indemnity of 1901, for so many
complete months as the sum may be sufficient to cover, with compound interest at 4 per
cent, per annum.

Instructions in the above sense are being issued to-day by the foreign representatives
to the managers of their respective banks concerned, and the. dean is directed to
request that instructions to the same effect may be issued to the Inspector- General of
Customs for transmission by telegraph to the Commissioner of Customs at Shanghai.

Peking, January 18, 1913.

No. 7.
Admiralty to Foreign Office. — {Received February 15.)

Sir, Admiralty, February 14, 1913.

I AM commanded by my Lords Commissioners of the Admiralty to transmit
herewith, for the information of the Secretary of State for Foreign Affairs, a copy of a

* Not received at Foreign OfiSce.

telegram of to-day's date which has been received from the Commander-in-chief, China,
respecting the withdrawal of troops from Canton and a part of the patrol on the West
River.

The commander-in-chief has been informed that his proposals are approved.

I am, &c.

W. GRAHAM GREENE.

Enclosure in No. 7.
Commander-in-chief, China, to Admiralty.

(Telegraphic.) February 14, 1913.

TROOPS no longer required Canton, in opinion of consul-general. 1 agree, as
does Sir J. Jordan, and troops are being withdrawn.

Request Admiralty approval also to pay off "Handy" and "Janus." Keeping
torpedo-boats temporarily, and discontinuing half West River patrol.

No. 8.

Sir Edward Grey to Sir J. Jordan.

Sir, Foreign Office, February 15, 1913.

I HAVE received your despatch of the 20th ultimo, reporting the decision arrived
at by the Diplomatic Body with regard to the disposal of the surplus customs revenues
for 1912.

I approve your action in the matter.

I am, &c.
. ' E. GREY.

No. 9.

Sir J. Jordan to Sir Edicard Grey. — (Received February 22.)

Sir, Peking, February 7, 1913.

I HAVE the honour to transmit to you herewith a summary by Sir Somerville
Head, of the general state of affairs in the provinces during the last quarter of 1912,
which has been prepared from the reports of His Majesty's consular officers.

I have, &c.

J. N. JORDAN.

Enclosure in No. 9.

Summary by Sir S. Head of General State of Affairs in the Provinces of China

for last quarter of 1912.

THE following account of the condition of affairs in the provinces has been
compiled almost entirely from the Intelligence reports of His Majesty's consular officers
for the last quarter of J 912. As will be seen, there is no connected story to tell.
Each province has been more or less left to work out its own salvation, and is reaping
the aftermath of the revolutionary movement, redeemed only by the great recuperative
powers of the country and the natural industry of its inhabitants. Minor mutinies and
robberies by disbanded troops, and farcical elections for the National Assembly, form the
chief items of the reports, while disorganisation and corruption in Government circles
still prevail in most districts. In short, it would appear that, by the close of 1912,
Young China has so far only succeeded in replacing a regime of benevolent despotism
by one of benevolent anarchy.

Shantung.

Apart from the brigandage in the south and west, and one or two mutinies of
ififerely local iniportance. Shantung has remained fairly quiet for the past few months.
Hwang Hsien, which had been previously looted by the Imperialist soldiers, was again

ransacked on the 20th October by its republican guard, whose pay was considerably in
arrear. In Lin Tse Hsien a riot occurred about the same time, owing to students
destroying the gods in the city temple. Towards the end of November a mutiny took
place in the Manchu garrison in Tsing-chou fu. Operations have been carried on
against the robbers in the Tsaochouf'u and Yenchoufu districts, and the governor now
claims that brigandage has been practically suppressed in this part of the province.
The most notorious of the leaders was seized and executed in December, but two others
remain to be captured. The newspapers have recently given accounts of brigandage in
the Wutingfu district, north of the Yellow River, which is usually free from such
troubles.

Disbandment of the troops is steadily proceeding, and is causing little trouble
except for a mutiny at Chefoo in the beginning of January. This occurred on the
4th January, after Tiearly all the Manchurian troops had been paid off, and had handed
over their arms to their commandant. A large number of them had gone on board the
steamer, which was to take them to the north. Owing to some interference, and
attempt to deprive them of a portion of their pay, the troops returned to shore, rushed
the arsenal, overcame the guard, possessed themselves of rifles and ammunition, and
started to hold up the traflic on the streets. They were soon joined by others anxious
for possible loot. A force of 2,000 lu chun and 200 sailors from the cruiser " Haichi "
were soon under arms and patrolled the streets, taking special care to safeguard the
foreign quarter. Order was restored on the following day, and the mutinous troops
shipped off to Dairen. There is some apprehension, however, of further trouble, owing
to the disagreements between the commanding officers. A Japanese man-of-war is
lying off Chefoo to watch developments.

In Shantung, as elsewhei'e, the elections for the Peking Assembly are resolving
themselves mainly into a contest between the Kung Ho Tang and the Kuo Min Tang,
the latter of which seems to be the more strongly organised. The bulk of the popula-
tion, however, are quite uninterested, and the number of voters is very small, the
majority of the people being quite apathetic towards the new regime.

Chinkiang.

Robberies by disbanded troops in the neighbourhood of Chinkiang seem to have
continued intermittently throughout the past few months, but the authorities are
doing what they can to maintain order. His Majesty's consul asked for and obtained
a guard for the district where the missionaries chiefly live, and this measure has proved
effective in preventing further robberies in that quarter. The general reduction in the
number of cases of serious crime is credited to the action of one Yangpiao, battalion
commander in the f]4th regiment, formerly a village bully in Hupei, who has now
acquired a great reputation as a merciless hunter of bad characters. He has made a
number of important arrests from time to time, and the accused, disbanded soldiers or
civilians, have lieen put to death. Colonel Yang executed the condemned in several
cases with his own hand, using a revolver.

The operations against brigands in the Hsiichoufu country have evidently been ot
good effect, the district of Pei Hsien being now comparatively free from robbers, and
merchants are resuming their normal business there. A party of disbanded soldiers,
mostly Tsingkiangpu men, left Hsiichoufu about the end of December for Chinkiang.
Thence they were moved on in boats towed by launches until, on arriving at Shaopo,
they broke out and looted all the launch stations at that place. They eventually
reached their destination without further trouble and dispersed.

The primary elections for the Provincial and National Assemblies took place in
December. For the National Assembly, Chinkiang is the centre of the third district,
which contains an electorate of 612,341. The primary elections were, here as elsewhere,
accompanied by every kind of fraud and trickery, but without disorder. The
Kuomintang were again the most active party.

The condition of the Grand Canal within Kiangsu province is worse than it has
been for many years. Launch ti'affic on ceri,ain sections has been intermittent, and the
movement of native boats impeded. His Majesty's consul at Chinkiang is endeavoui'ing
to rouse the local authorities to the seriousness of the matter.

Kiangsi.

The last quarter of 1912 passed, for the most part, uneventfully, as far as the
province of kiangsi was concerned. The flow of administrative reforms which

characterised the previous six months was checked, in view of the pending elections
for the Provincial Assembly. The primary elections, which took place in December,
only served to confirm the prevailing opinion that the Chinese were insufficiently
educated for so radical an alteration in their system of government. Bribery and
corruption, impersonations, and other malpractices were the chief features of the Kiangsi
elections, as of those of other provinces. The native newspapers reported numerous
instances in which many scores of voting papers were handed in by the same individual,
and many cases were mentioned in which a voter arrived at the polling station only to
find that his name had already been marked off as having voted. In the wrangles that
ensued with the superintending officials, ballot boxes were broken up and the voting papers
scattered. On the whole, His Majesty's consul reports, more interest was shown in the
elections by the people generally than might have been anticipated ; but it is unlikely
that the majority understood the meaning of political parties or the aims ot the
particular party to which they professed adherence. As an example, a prominent man
m Kiukiang is chairman of the Conservative party, but at the same time a member ot
the committee of the Progressive party.

For some time past a general feeling of uneasiness and impending trouble has been
current at Nanchang. On the 10th December a number of fires broke out simul-
taneously in diflferent parts of the city, and the soldiers dispatched to maintain order
and assist in extinguishing the flames were met by hostile armed crowds. So soon,
however, as the Tutu realised that an organised outbreak was taking place, he took
vigorous measures and quickly restored order. Some fifty of the rioters were shot out
of hand, and subsequently another sixty or so were executed. Foreigners here as
elsewhere did not sufier from any molestation. There have been two or three
minor outbreaks at other places in the province, in each case in connection with dis-
banded troops, but none on a large scale, and order was speedily restored on ever}-
occasion.

Wuhu has remained fairly quiet, except for one or two small mutinies, due to the
troops having received no pay for over two months.

nankow.

The general situation throughout the consular district of Hankow^ during the last
quarter of 1912 has been peaceful, and in spite of financial difficulties and trouble with
refractory soldiery the republican authorities have been successful in maintaining a
fair degree of order and in inspiring more confidence in the new regime. General Li
has been the main factor in keeping peace betw^een the rival political parties, and there
can be little doubt that the stability of the administration in Hupeh depends in a
large measure upon his continuance at the head of affairs. In spite, however, of the
vice-president's personal popularity, the danger of his falling a victim to assassination
is so great that General Li is practically a prisoner in his own yamen, where the most
stringent precautions are taken to prevent the admission of unauthorised visitors, and
which he leaves only on very rare occasions. These precautions are by no means
unnecessary, as several plots against the vice-president's life have come to light, and
there is a widespread feeling that General Li's political rivals are making desperate
efforts to effect his removal.

The finances of Hupeh remain in a chaotic condition and great difficulty is being
experienced in finding the necessary funds for the upkeep of the military establishment
and the immediate needs of the administration. The large quantities of Hupeh
Government notes which are still on the market and are negotiable, if at all, only at a
very heavy discount, are a very serious obstacle to the return to sounder financial
conditions.

The conditions at present prevailing on the Peking-Hankow Railway, notably that
portion of the line which runs through Hupeh and Honan, reflect most unfavourably on
the capacity of the Chinese to carry through such enterprises without strict foreign
control. The ordinary trains are invariably filled with armed ruffians who utilise their
military status as a cloak for travelling iip and down free of charge and pestering
harmless civilians. Any native travelling on the line has to pay these men a sum
of money in return for which the soldier forces the ticket-collector to let him travel
gratis. Resistance is useless as one or two conductors have found, after being thrown
out of their train by these men. Travellers who refuse to pay toll to the _ soldiers are
forced to stand in the corridors. The cars are in most cases filthy, and it is only after
forcible eviction of soldiers that even a European can obtain a seat. Two officers,
generally of field rank, travel on the trains to " maintain order" ; but as usual they are

without any authority and confine their activities to strutting up and down the
platforms at the various halting places. Trains are frequently very late and in many
cases station-masters cheerfully pass uny train through regardless of the possibility of a
collision. Thefts of screws from the "chairs" of the rails often occur, and are a source
of danger to trains, as the line appears to be safe, but is liable to shift on being touched
and thus cause a derailment. Complaints have been also frequently made of thefts
from goods trains, usually the work of the same soldiers. The only train free from the
various pests above mentioned is the weekly express, over which the Pluropean inspectors
are allowed a little more control.

Honan.

The Honan authorities do not appear to have been successful in maintaining
order and suppressing brigandage. Amongst the innumerable acts of lawlessness
reported, one of the most daring occurred in the early part of December when a band of
500 mounted robbers attacked the district city of Hsi-hua Hsien, and after looting the
town departed mnnolested, taking with them some of the leading inhabitants for whose
release they demanded a ransom. The authorities seem powerless to deal with these
brigands, many of whom are disbanded soldiers and are possessed of modern weapons.

Shensi is also reported to be overrun with disbanded soldiers ; but conditions in
Kansuh show signs of improvement, although the strong hostility which exists between
the Mahommedan troops and the other inhabitants is a constant menace to the peace of
the province.

Hunan.

There have been no serious disturbances in Hunan during the past quarter; but
although the disbanding of the troops has freed the authorities from the apprehension of
an organised revolt, it has let loose upon the province a horde of men who have bt-en
too long maintained in absolute idleness on an abnormally high rate of pay to settle
down peaceably to their usual avocations. In consequence there is not a district
but has its tale of acts of brigandage ; while in several cities gangs of disbanded soldiers
run riot, terrorising the peaceable section of the population and setting the authorities
at defiance. There has nevertheless been a marked absence of anti-foreign feeling. In
fact His Majesty's consul at Changsha observes that it has been once more shown
conclusively that the only requisite for the complete safety of foreigners in Hunan is
that there shall be no active campaign against them on the part of those in authority.
The officials on their side continue to exhibit anxious care for the safety of foreigners.
This is remarkable testimony to the fact that anti-foreign feeling in China has been
officially engineered in the past. Twenty years ago the Hunanese were rabidly anti-
foreign and Changsha, the capital of the province, was a forbiddeii city.

Various new secret societies have sprung into existence which mostly confine their
activities to organised brigandage against the rich and official classes. The authorities
are enrolling among the inhabitants small bands of military police for the preservation of
order, and His Majesty's consul remarks that the general outlook at the end of the year
is, on the whole, not unpi'omising.

The finances of the provinces are, as might be expected, in a state of confusion.
This, however, does not prevent the officials from drawing up ambitious schemes
for public works and education involving very heavy expenditure, and very few of which
seem likely to mature in the near future. Many changes have also been introduced
in the judicial system, which has much deteriorated under the new regime. The judges
are in most cases comparatively young men with a smattering of legal knowledge, but
quite unacquainted with the practice of law and without the varied experience of the
magistrates under the old system. In fact the administration of justice would appear
to be the worst featui'e of the new Government, and His Majesty's consul at Changsha
reports that in cases where British subjects were interested it has required months of
unremitting pressure coupled with repeated protests against the procrastination or the
bad faith of the authorities to bring the matter to a hearing. Though further pressure,
supported by clear and conclusive evidence, has at last extorted in each case a reluctant
judgment for the plaintiff, all the consul's eftbrts to obtain the enforcement of a single
one of the judgments have been fruitless.

As already recorded in the case of other provinces, the elections in Hunan were
met everywhere with indifference. Procrastination or absolute omission to prepare and
transmit the draft registers of voters was univer.-;al. Prior to the polling much can-
vassing took place on the part of candidates for election. The favourite device was to
buy up as many as possible of the tickets, one of which was issued to each qualified
110891 . C

elector, and distribute them amongst a nmnber of men who were feasted liberally-
beforehand. Care, however, was taken to make no payment until after the election,
when it could be ascertained whether they had voted for their employer or not. The
tickets appear to have fetched high prices, and to have been freely disposed of; 5 dollars
apiece was commonly paid, and the price rose as the date of the polhngdrew near. On
the first tlay of the elections fights between the factions of the rival candidates took
place round the polling stations in a number of districts. The ballot-box with the
voting papers was usually destroyed, and in several instances the polling station was
wrecked as well.

Apart from political troubles, the general state of the province, owing to the
excellence of the crops, is showing increasing signs of prosperity, and trade is largely in
excess of the figure for the corresponding period of 1911. Steps are being taken to
develop the mineral deposits in which this province is so lich, und which include coal,
lead, tin, iron, copper, and gold. Various industrial undertakings and railways are
also being mooted.

Ichang.

Robberies continue with great frequency in the country districts round Ichang. A
serious rising occurred at Hsing Shan, in the Kueichou district, which took the local
authorities over six weeks, and some 2,000 troops to quell. The rising was organised
by the Red Lamp Society, who are strong on the Hupei-Szechuan border. The trouble
began with some 300 to 400 men attacking the local gentry at Hang Hsien. The judge
interfered and was killed, as was also his junior. The outlaws then openly declared
against the otficials. Some seventy soldiers, sent from Kueichou to crush the movement,
were badly beaten, and an appeal was sent to Tcharig for reinforcements. Four com-
panies of infantry were dispatched, but by the time they arrived on the scene the
numbers of the insurgents had increased to some 3,000 men, strongly entrenched in
the hills. Further reinforceaients with mountain guns had to be sent from Siangyang
before the rebels were finally turned out of their strongholds.

Szeehuan.

The political situation at Chengtu has been chiefly remarkable for the comjjlete
ascendency which has been gained by the military party under the acting Tutu Hu
Ching-yi and the gradual elimination of rival claimants for power from among the
various political parties in the province. Owing to the successful intrigues of Hu, the
president was induced to abolish the separate post of civil governor, hitherto held by
Chang P'ei-cho, president of the Tung Meng Hui, and to invest Hu himself with the
duties of the office. Other members of the Teng Meng Hui were compelled to resign
their offices, the only one now left in a situation of importance being the Commissioner
for Foreign Affairs, Chang Chih-hsiang, -vyhose position is none too secure. As a result
of the ascendency of the military party, nearly all the yamdns and temples have been
converted into barracks and the parade grounds in the corners of the city are scenes of
great activity.

In spite of the good order that is being maintained, signs of unrest and discontent
are not wanting, and plots engineered by the many divergent political parties are
constantly coming to light.

The restoration of order in Szeehuan has rendered the return of foreign missionaries
to their districts feasible and the great majority are now back at their posts with their
wives and families. Partly owing to their temporary retreat a movement has been
started in more than one place for eliminating the foreign missionaries altogether
from the control of church work and placing the mission centre and incidentally the
mission property under the control of native pastors. Such a development appeals
strongly to the highly independent Szeehuan mind and has the sympathetic support of
the non-Christian but equally anti-foreign native officials. This phase will require some
tactful handling by the foreign missionary body in the near future.

The acting British consul at Chungking reports that the interior of Eastern
Szeehuan is reverting to noi-mal conditions, and that travel and residence in these parts
is now incomparably safer than was the case in December 1 9 11 . Armed roboers,
however, are still to be feared, as is evidenced by the recent attack on a party of
missionaries near Fushan, which resulted in the death of the six-year old son of the
Rev. R. O. JolliffW.

The financial situation in the province remains highly unsatisfactory, though some
attempt is being made to redeem the enormous issue of war notes with which Szeehuan
has been flooded since the revolution of 1911.

Yunnan.

The Apostolic Faith Mission has opened a bi-anch in Yiinnan-fu, and the workers
include Canadians, Dutch, Norwegians, Danes, and Swedes, to the number of nine.
Three members of this sect, of whom two are ladies, are proceeding to Likiang, where
they will establish their headquarters, in the hope of getting into touch with the
Yiinnan Thibetans.

Through communication between Yiinnan-fu and Tonkin, on the French railway, is
promised for the first days of the present year. A serious landslide in May 1910
completely carried away the line at kilometre 328, and repairs have been proceeding,
ever since. Goods have been transhipped and carried by a small decauville from one
side to the other. The summer of 1912 was remarkable for its dryness, and only one
interruption occuri'ed in October at kilometre 337, when a large rock fell on to the
line and delayed traffic for eight days. More serious landslides are expected to occur
next Slimmer, as the cliffs which overhang the line in Patalio Valley are in a most
dangei'ous condition.

Paper money succeeded in maintaining its par value at Yiinnan-fu throughout the
past year.

Kuangsi.

The political situation in Kuangsi calls for no special comment. After a session of
about two months the provisional Provincial Assembly was dissolved on the 18th October
without having accomplished any work of gi-eat importance. Primary elections for the
new Assembly, as well as for the Peking parliament, were held during the latter part of
December. Great rivalry exists between the Kung Ho Tang and the Kuo Min Tang,
but the latter are likely to gain the majority of seats. There have been the usual
complaints of irregularities in the issue of voting papers, and hints of bribery, but
interest in the elections has not been sufficient to cause any public enquiry into such
charges. The Central Government have further extended their nominal authority in
the province by contirming by Presidential Mandate the six heads of the Government
departments, but the appointments of the Tutu have not been interfered with.
Brigandage still exists in many parts of the province, though not to an unusual extent.
In addition to the troops, which are stationed in the country districts to maintain order,
a number of petty officials have been sent to each district, whose special duty it will be
to search out bad characters, and keep track of bauds of robbers. They will call on the
military to assist them if necessary. No cases of piracy have been reported on the
west river, above or below Wuc-how, during the past quarter, and the riverine districts
appear to be practically free from robbers. The British motor-boats continue to take
guards supplied from the river police, but Chinese boats have to hire their own. Lack
of funds has recently caused the Prefect to reduce the river police force, and the acting
British consul has accordingly requested that men may be detailed at Nanning for the
new British boats running to that port.

Some trouble occurred at the end of December in connection with the opening of a
gospel hall by the Church Missionary Society at Ch'uanchou, which roused the
opposition of the local gentry. The matter was brought to the notice of His Majesty's
Minister by Bishop Bannister, who was at Peking at the time, and who had received
a report on the subject from the Rev. P. Stevens, the Church Missionary Society's
agent at Yungchou-fu, Hunan. Sir John Jordan has requested the Wai-chiao Pu to
direct the Tutu to issue a proclamation removing any doubts of the people of Ch'uanchou
as to the right of the mission to carry on work in that town ; and has instructed the
acting British consul at Wuchow, who is cognisant of the facts of the case, to endeavour
to effect an amicable settlement on the spot.

Pakhoi.

Owing to the severity of the martial law and the ruthless execution of any robbers
apprehended, the country round Pakhoi has remained quiet. The number of executions
in that district since the establishment of the republican administration is estimated at
at least 3,000, and the people are thoroughly overawed thereby. The law courts are
not held in high esteen, and have recently suffered further in prestige by the dismissal
of the judge for being concerned in selling Government rifles to the villagers, ostensibly
for their protection against robbers.

The trade route to Kwangsi, through Lingshan, is now secure and inland trade is
A. series of roads are projected, which should prove of great advantage ta
10891 C 2

the district if properly maintained, but so far little headway has been made, owing to
lack of funds. Two municipal roads are being surveyed to Yamchow and Kaoehow
respectively, some 7 miles of the latter having been commenced.

A good deal of petty outlawry lias been reported from Kaoehow and Leichow, and
a company of soldiers has been sent from Limchow to reinforce the military at Leichow.
In the middle of October a band of outlaws ambushed the Kaoehow troops, captured
a field-gun, and killed fifty or sixty men. This incident was much exaggerated and
led to a panic in the country-side, which happily was ended by the arrival of 1.000
fresh troops from Canton. Since then an excellent rice crop has been gathered and
the district has been fairly quiet, to such an extent that 182 delegates to a bible
workers' conference at the American mission at Kaoehow went up and returned to
their homes unmolested.

The elections are rousing very little enthusiasm. The Teng Meng Hui is beino-
organised as the_ ofiicial successor to the Kuo Ming Tang, with the object of assisting
the Government in countermining the efforts of the Triad Society.

Kiungehow.

The district of Kiungehow has been subjected to the usual disturbances and

piracies from which it never appears to be entirely free. The most serious trouble is

in the neighbourhood of Dingan, near Kiungehow, and in' the district of Ling-sui, in
the south-east of Hainan.

No. 10.

Sir J. Jordan to Sir Edward Grey. — {Received February 24.)

Sir, Peking, February 7, 1913.

IN my despatch of the 20th ultimo, I had the honour to report the decision
taken by the Diplomatic Body in respect to the disposal of the surplus customs revenue
available for the indemnity, namely, that it should be remitted pro rata to the varioiis
Governments for so many months as the sum should be sufficient to cover, with
compound interest at 4 per cent, per annum.

Instructions to this effect were duly telegraphed by the Inspector-General of
Customs, at the instance of the Wai-chiao Pu, to the Cfommissioner of Customs at
Shanghai, and the latter immediately consulted the International Bankers' Commission
with a view to giving effect to this decision. As a result of this consultation the
bankers telegraphed to the Diplomatic Body suggesting that the exchange for remittance
of the indemnity payments should be settled weekly at the rate of one month's instalment
per week. They pointed out that this arrangement would be advantageous to the
Chinese Government, and would avoid upsetting the exchange markets which would
be seriously affected by the purchase of so large an amount of gold on one day.

A formal proposal to the same effect having been addressed to the foreign
I'epresentatives by the Wai-chiao Pu, the question was considered at a meeting of
the Diplomatic Body held on the 3rd instant, and a telegram was dispatched to the
International Bankers' Commission stating that we had no objection in practice to
the proposed arrangement, provided it was understood that it was not to be regarded as
a precedent, and that the compouad interest at 4 per cent, was paid on the instalments
until the date of transfer.

Copies of correspondence exchanged with the Wai-chiao Pu on this subject are
enclosed herewith.

I understand from the Shanghai press that the first payment was made on
the 31st ultimo, exchange having been settled on that day for the instalments due

for November and December 1911.

I have, &c.

J. N. JORDAN.

Enclosure 1 in No. 10.

Wai-ehiao Pu to Sir J. Jordan.

Sir, Peking, January 30, 1913.

WE have the honour to inform your Excellency that a report has been recf^ived
from the Revenue Council to the eftect that they have received the following communi-
cation from the Ministry of Finance : —

"Instructions have already been sent to the Inspector-General of Customs to take
without delay the steps which may be necessary in connection with the proportional
payment of the indemnity. The Inspector-General has now verbally informed this
Ministry that a telegram has been received from the Commissioner of Customs at
Shanghai to the effect that gold exchange is now very stable : the sterling which must
be purchased for the payment of the indemnity, however, amounts to several million
pounds, and as a result the price of gold would certainly show a sudden rise, and it is
to be feared that a panic might ensue among the mercantile community ; the international
banks have now under discussion a scheme for periodical purchases of gold at intervals
of about ten days or one week, thus avoiding sudden fluctuations in the price of
sterling and disturbances of the market."

It is requested that this proposal should be communicated to the Diplomatic Body.

It would appear that the price of gold is now very stable, but that, if the purchases
of gold at one time were too heavy, the price of sterling would suddenly rise, which
would certainly react upon the prosperity of foreign and native trade ; it appears to us,
therefore, that the Inspector-General's scheme is designed for the protection of the
market and in the general interest, and that there is no intention of causing
obstruction.

In addition to communicating with the Minister of each Power, we have the
honour to address this to your Excellency in your capacity as dean of the Diplomatic
Corps.

We have, &c.

(Ministers of the Wai-chiao Pu.)

Enclosure 2 in No. 10.
Memorandum communicated to Wai-chiao Pu.

THE Wai-chiao Pu's letter of the 30th ultimo, on the subject of the method
to be adopted in remitting in sterling to the various Governments the sums available
for proportional payment of overdue instalments of the 1901 indemnity, has been duly
considered by the Diplomatic Body.

The foreign representatives had already been informed by the International
Bankers' Commission of the proposal made in consultation with the Commissioner
of Customs that exchange for remittance of indemnity payments should be fixed
weekly at the rate of one month's instalment per week, and the dean was directed
to inform the commission that the Diplomatic Body have no objection in practice to
the proposed arrangement, provided it is understood that it is not to be regarded
as a precedent, and that the compound interest at 4 per cent, is paid on the instalments
until date of transfer. A telegram in this sense was dispatched to Shanghai on the
3rd instant, and the dean has now the honour to inform the Wai-chiao Pu accordingly.

Peking, February 6, 1913.

No. 11.

Sir J. Jordan bo Sir Edward Grey. — {Received February 27.)

Sir, Peking, February 11, 1913.

I HAVE the honour to enclose a summary of six Presidential orders which
appeared in the " Government Gazette " of the 9th January last.

I have the honour to draw your attention to the substitution of Foreign Affairs
delegates for Taotais as the officers responsible for the transaction of business with His
Majesty's consuls.

I would point out that, while the Taotai was an official having control over the
government of the territory within his jurisdiction, the newly appointed Foreign
Affairs delegates hold no such responsible position. The main purpose which, I
believe, their appointment will serve is that of a buffer between foreign consuls and the
local authorities, relieving the latter from pressure of discussion with the former and
rendering more difficult the obtaining of satisfaction for wrongs done to foreign subjects.

Article 7 of the Treaty of Tien-tsln, 1858, provides that consuls and vice-consuls
rank with intendants of circuit and prefects respectively, and entitles the former to have
access to the official residences of the hitter and communicate with them on a footing of
equality. The object of this provision was to ensure that opportunity should be
obtained for the discussion of matters affecting British interests with officials directly
concerned in the administration of the regions in which they were stationed. I would
add that the appointment of Foreign Affairs delegates is in violation of this treaty
provision.

I have, &c.

J. N. JORDAN.

Enclosure in No. 11.

Summai'y of Presidential Orders appearing in the " Government Gazette " of tlie
9th January, 1913, and containing Regidations designed to create uniformity in
the Local Government of Cliina.

Order No. 2.

THROUGHOUT the republic, with the exception of Mongolia, Thibet, and
Koko-nor, the chief provincial authority is to be the " civil administrator " ; or, in
provinces where no such official has been yet appointed, the military governor, who is
to carry out the duties of civil administrator in addition to his own.

It is laid down that the chief administrative authority in every province shall
establish an " Administrative Office," to consist of a general office and the following
departments : —

Department of the Interior.

Department of Finance.

Department of Education.

Department of Industry.

Each of these departments is to have a "chief of department," while the sections
of each department are to have each a chief and assistants.

Order No. 3.
This order deals with the local government of the metropolis.

Order No. 4.

By this order the Chinese title of the old intendants of circuit or Taotais is altered,
the extent of their jurisdiction remaining the same as formerly. In provinces where
the post of Taotai has been abolished the chief administrative authority may, if the
circumstances require it, establish intendants of circuit under the new title.

Oi^der No. 5.

All subdivisions of a province, whether prefectures, sub-prefectures, departments,
or districts, are in future to be styled " districts." The chief administrative authority
in each is to be the district magistrate.

In every district where a Court of Justice has not yet been established, one to
three assistant judges may be appointed by the judiciary organisation commission.

Order No. 6.

By this order the various titles previously existing for the commissioners of
Foreign Affairs are altered to that of Foreign Affairs delegates of the Board of Foreign
Affairs. Such delegates are only to be appointed at the more important open ports.

The place of all commissioners of law or justice at present existing is to be taken
by a judiciary organisation commission in each province.

Superintendents of customs and salt commissioners are to remain as heretofore.

Foreign Office delegates, chief's of judiciiuy organisatiou commissions, controllers of
customs, and salt commissioners are to be appointed by the President on submission of
names by the Premier at the request of the li- ad of the Ministry concerned.

In a separate order it is directed that all the above orders shall be carried out by
March 1913.

They are provisional and shall only remain in force until regulations are passed by
the National Council.

No. 12.

Sir J. Jordan to Sir Edward Grey. — {Received March 1.)

Sir, Peking, February 12, 1913.

WITH reference to my despatch of the 7th instant, I have the honour to
enclose herewith copy of a letter which I have received from the manager of the Hong
Kong and Shanghai Bank at Shanghai, reporting the payment of the British share of
indemnity arrears for the months of November and December 1911 and January and
February 1912, and forwarding a statement of the British share showing the net total
amount remitted to London on account of payments due for the half-year ending
December 31, 1911.

I have, &c.

J. N. JORDAN.

Enclosure 1 in No. 12.
Hong Kong and Shanghai Banking Corporation to Sir J. Jordan.

Sir, Shanghai, February 4, 1913.

I HAVE the honour to acknowledge receipt of your letter of the 18th January,
informing me of the decision of the Diplomatic Body with regard to the remittance of
the balance of the maritime and native customs revenues to the various Governments,
on account of the indemnity.

I am informed that, with a view to avoid disorganising the Shanghai exchange
market, the Provisional Government of China has left the settlement of exchange in
the hands of the Inspector-General of Customs, who has given the Commissioner of
Customs at Shanghai discretion in this matter.

The Commissioner of Customs at Shanghai has, up to the present, settled
exchange for the payments due for the months of November and December 1911,
and January and February 1912, and the sterling amounts representing the British
share have been transferred by telegram in the usual way to London.

A statement of the British share, showing a net total of 165,876L lO*-. 6d. remitted
to London on account of payments due for the half-year ending the 31st December,
1911, is enclosed.

Remittances of 27,980Z. IS.s. 7d. for January and February 1912 were made on the
3rd and 4tb February, 1913, respectively.

Compound interest at 4 per cent, per annum on overdue payments will. I am
informed, be paid later on up to the date of remittance. A detailed statement showing
how the amount is arrived at will then be sent to you.

'a. STEPHEN, Acting Manager.

Enclosure 2 in No. 12.

Statement of Chinese Indemnity due to Great Britain for half-year ending
December 31, 1911, and amounts paid.

£ s. d.

Amount due for principal of indemnity for 1911. . .. .. 37,972 15 9

Amount due for interest of indemnity for 1911 .. .. .. 297,798 7 0

Due for 1911 .. ,. .. .. 335,771 2 9

Half paid June 30, 1911 .. .. .. 167,885 11 5

Balance due ,. .. .. .. 167,885 11 4

Payments received and Interest allowed.

£ (,. d.

July 31, 1911. 28,000/. 4 per cent, interest to December 31, 1911, 153 days 469 9 7

Aug.31, 1911. 28,000/. „ „ „ „ 122 „ 374 7 7

Sept. 30, 1911. 28,000/. .. „ „ „ 92 „ 286 6 8

Interest allowed
Oct. 26, 1912. 28.000/.
Feb. 1,1913. 28.000/.
PeU 1,1913. 27,885/. 11*. Ad.

167,885/. Us. Ad.
December 31, 191 1. Amount due as above for December. .

Les?' interest allowed at 4 per cent, as above

Less 4 per cent, interest for 184 days on
18,986/. In. 10c?., being half of principal
paid by .Tune 30, 1911 .,

Less commission on indemnity service for 1911
paid to Rong Kong and Shanghai Banking
Corporation

July to November instalments, five at 28,000/. 140,000 0 0
Total remittances to London . . 165,876 10 6

. 1,126

27,885
1,126

11
3

26,759

382

26,376

500

25.876
140.000

10
0

6
0

No. 13.

Sir J. Jordan to Sir Edward Gh^ey. — (Received March 20.)

Sir, Peking, March 4, 1913. .

WITH reference to my despatch of the 27th December last, I have the honour to
report that six gentlemen have been chosen to represent the Chinese communities
residing abroad in the Upper House of the New Parliament.

The electors assembled at Peking from a very wide area, including many portions
of the British Empire, and I received a visit from one gentleman who appeared as
the representative of his Chinese community in Melbourne. Although of Chinese
parentage he was a British subject ; he had practised at the Australian bar for ten
years and had never before visited China. His constituents had evidently behaved with
generosity in the provision of his travelling expenses, and he admitted that they were
anxious to maintain their link with China, whilst they hoped that parliamentary
representation would prove a lever for obtaining commercial privileges and for
improving their status. I gathered indeed that on arrival he had hoped to be
nominated for one of the seats, but he found that the visiting electors had been well
canvassed by candidates who were earlier in the field.

The President has made an address to the overseas representatives, giving evidence
of a far-seeing desire to draw closer the bonds between Peking and the wealthy Chinese
communities which are to be found on the Pacific coasts, in Australia, the Straits
Settlements, Hong Kong, Burma, and India.

I have, &c.

J. N. JORDAN.

No. 14.

Sir J. Jordan to Sir Edward Grey. — (Received March 22.)

Sir, Peking, March 7, 1913.

I HAVE the honour to report that I have received from the International
Bankers' (Commission their report for the quarter ended the 31st January last, in which
they deal with the appropriations of customs revenue during that period. The report
of the commission may be summarised as follows : —

The net" revenue collected from the 31st October, 1912, to the 31st January, 1913,
amounted to 9,935,293 taels, as against 10,567,935 taels collected during the previous
quarter.

Payments of loan instalments, including both principal and interest, amounted to
6,789,732 taels. All instalments due up to tlie 31st January were paid off.

The sum of 10,273,682 taels was transferred to the indemnity account, leaving a
balance in hand on the 31st January of 2,186,364 taels.

The exchange was fixed for indemnity instalments due during November and
December 191 1 , and the amounts were remitted by four of the banks. The balance
remaining in the hands of the banks will permit of remittances being made on account
of the January, February, March, and April instalments.

I have, &c.

J. N. JORDAN.

No. 15.
Sir J. Jordan to Sir Edward Grey. — {Received March 22.)

Sir, Peking, March 8, 1913.

I HAVE the honour to report that, after consultation with the Admiral Command-
ing-in-chief and His Majesty's consul-general at Canton, the detachment of Indian troops
stationed on Shamien was withdrawn on the 20th February, the Chinese New Year
festivals having passed without any untoward incident.

The barbed wire entanglement and barricades are being retained for the present,
and His Majesty's ship " Clio" remains as senior naval officer's command.

I have, &c.

J. N. JORDAN.

No. 16.

Sir E. Goschen to Sir Edward Grey. — (Received March 25.)

Sir, Berlin, March 20, 1913.

I HAVE the honour to transmit herewith a summary by Mr. Sampson of a
memorandum on the development of Kiaochow from October 1911 to October 1912,
which was published recently in the " Norddeutsche Allgemeine Zeitung."

I have, &c.

W. E. GOSCHEN.

Enclosure in No. 16.

Summary of Memoranduvi on the Development of Kiaochow from October 1911

to October 1912.

THE Chinese revolution, which began in the autumn of 1911, had an adverse
efPect on the commerce of the entire country. In the midst of the political troubles,
however, Tsingtau remained perfectly secure and tranquil, to such an extent that
many influential Chinese merchants took refuge in the colony. It is also worthy of
note that the demand for land was greater than in any year since the colony was taken
over. The trade of the colon j" was favourably affected by the above-mentioned
settlement of Chinese merchants and by the good harvest in the hinterland.

These circumstances more than outweighed the haiinful effects of the revolution,
and there was in consequence an increase of 7'6 per cent, in the revenue of the Chinese
Maritime Customs, which amounted to 1,406,113 Haikwan taels in 1911-12 as against
1,306,520 Haikwan taels in 1910-11.

The trade of the colony rose from 69'40 million Mexican dollars in the previous
year to 89"96 million Mexican dollars. The value of the dollar, moreover, increased
from an average of l.s. lOd. to 2s. in the year 1911-12.

According to the statistics of the Maritime Customs Office, the imports of goods
not of Chinese origin, excluding the duty-free materials for railways and mining,
amounted to 30'9 million dollars as against 28'7 million dollars in the preceding year,
while the imports of Chinese origin, which had continually decreased in recent years,
rose from 8-4 million dollars in 1910-11 to 22-06 million doUars in 1911-12. This
rise was due principally to the above-mentioned increase in the Chinese population,
but was also influenced by the completion of the Tien-tsin-Pukow Railway. The
total imports of German origin amounted to 5"4 million Haikwan taels, or 796,500Z.
[1089] D

The exports in 1911-12 amounted to 37,000,000 dollars as against 32"3 million
dollars in 1910-11. The most important exports in the two years were as follows : —

1910-11.

1911-12.

Straw plaiting
Ground nuts
Ground nut-oil
Silk of all kinds . .
Cattle ..

Dollars.
7,200,000
5,700,000
2,000,000
5,600.000
300,000

Dollars.
15,400.000
5,000,000
3,200,000
5,900,000
700,000

During the year 727 ships were cleared, with an aggregate tonnage of
1,136,012 net register tons as against 590 ships of 1,025,267 tons in the previous
year.

There was a considerable increase in the receipts of the Shantung Railway
Company, which was partly due to the fact that the Tien-tsin-Pukow Railway, joining
up to the terminus of the Shantung Railway at Tsinan-fu, was given over to traffic.
It is proposed still further to develop the German railways in Shantung by constructing
in the first place a line from the station of Kaumi, on the Shantung Railway, to the
south of the province via Ichou-fu and Ihsien to Hanchwan.

The Shantung Mining Company extracted 532,589'5 tons of coal from the
1st October, 1911, to the 13th September, 1912, as against 453,275'] 5 tons in the
same period of the preceding year.

The revenue of the colony increased from 5,325,978 marks to 6,739,480 marks,
an increase which is accounted for principally by the receipts from the sale of land
and from the working of the Tsingtau dockyard.

Endeavours are being made by the educational authorities to increase the
importance of Tsingtau as a centre of civilisation. Their principal organisation for
this purpose is the German-Chinese high school, which consists of a lower grade with
285 students and a higher grade with an attendance of 66. The latter is composed
of four departments, viz., the technical-scientific, medical, legal, and agricultural.
On account of limited space it was found impossible to accept many Chinese
applicants who wished to study at the high school. A new building is, however,
ujider construction, and Avill shortly be completed. As many scholars from English
schools applied for admission to the high school, a special class was provided for
Chinese students speaking English with the object of instructing them in the German
language so that they might advance as rapidly as possible to the higher classes.
This class is also already crowded. There is also a scientific translation institute
connected with the high school, which undertakes translations from German to Chinese
and vice versa.

No. 17.

Sir J. Jordan to Sir Edward Grey. — {Received April 3.)

(Telegraphic.) Peking, April 3, 1913.

IT is thought that there will probably be a struggle betw^een Yuan Shih-kai and
the Kuomintang. The latter are strongly opposed to election of Yuan as President,
and say that he must fight if he will not withdraw his candidature. They believe that
he will yield, but, if not, they profess to be ready to fight, as they have the Wuchang
troops on their side.

No. 18.

Sir J. Jordan to Sir Edward Grey. — (Received Apfril 8.)

(Telegraphic.) Peking, April 8, 1913.

ROTH Houses of Parliament were formally opened this morning without incident.

No. 19.

Sir J. Jordan to Sir Edward Grey. — {Received April 10.)

Sir, Peking, March 27, 1913.

I HAVE the honour to transmit to you herewith a copy of a memorandum which,
in accordance with your instructions, I have addressed to the Wai-chiao Pu, acquainting
them with the objections of His Majesty's Government to the policy of the regulations
for the election to the National Assembly of deputies to represent Chinese resident
abroad, in so far as British colonies are concerned.

I have, &c.

J. N. JORDAN.

" Enclosure in No. 19.
Memorandum communicated to Wai-chtao Pu.

ON the 29th November last His Majesty's Minister, at an interview with the
Minister of Foreign Affairs, discussed the subject of the regulations issued by the
Chinese Government for the election of representatives to the National Assembly hj
Chinese resident abroad, and took occasion to warn his Excellency of the possibility
of objections being raised by His Majesty's Government to the participation by
Chinese resident in British colonies in such elections.

His Majesty's Minister has now the honour to inform the Wai-chiao Pu that he
has been instructed by His Majesty's Principal Secretary of State for Foreign Affairs
to state formally to the Chinese Government that His Majesty's Government entertain
strong objections to the policy of these regulations so far as British colonies are
concerned.

Peking, March 27, 1913.

No. 20.
Sir J. Jordan to Sir Edward Grey. — (Received April 24.)

Sir, Peking, April 8, 1913.

WITH reference to my despatch of the 20th January last, I have the honour
to transmit to you herewith a copy of a letter from the secretary of the Inter-
national Bankers' Commission at Shanghai requesting that the arrangement for the
apportionment of the surplus customs revenue for the present year should be modified.
The existing arrangement will be found recorded in the identic letter from the
Diplomatic Body to the Bankers' Commission of the 30th January, 1912, which formed
Enclosure No. 5 in my despatch (;f the same date.*

The question was considered at a diplomatic meeting held on the 7th instant, when
the proposal of the Bankers' Commission was unanimously accepted and communicated
to-day to the banks at Shanghai in an identic letter, copy of which is enclosed
herewith.

< I have, &c.

J. N. JORDAN.

Enclosure 1 in No. 20.
International Bankers^ Commission to Sir J. Jordan.

Sir, Shanghai, March 26, 1913.

I AM instructed to inform you that a meeting of the International Bankers'
Commission was held on Thursday, the 20th instant, to discuss the question of custody
of the loan service funds.

It was decided to request you to cancel clause 6 of your letter of the 30th January,
1912, and to add to clause 2 the following sentence : —

" but as soon as the service for the current year of all loans contracted before 1900
is provided for by funds in these banks, then the surplus shall be divided pro rata till
the end of 1913 amongst the banks having charge of the indemnity service."

• See " China, No. 8 (1912)," No. 113,
" [1089] ^ D 2

The clause would then read : —

" The banks chiefly interested, viz., the Hong-Kong and Shanghai Banking
Corporation, the Deutsch-Asiatische Bank, and the Russo- Asiatic Bank, shall be
custodians of the customs funds at Shanghai, but as soon as the service for the current
year of all loans contracted before 1900 is provided for by funds in these banks, then
the surplus shall be divided pro rata till the end of 1913 amongst the Vjanks having
charge of the indemnity service."

I shall be glad to hear that the Diplomatic Body approve of the above
alterations.

I have, &c.

H. W. ROBERTSON, Secretary.

Enclosure 2 in No. 20.

Sir J. Jordan to Managers of Hong Kong and Shanghai Banh and Chartered Bank

of India, Austral'} a, and China.

Sir, Peking, April 8, 1913.

I BEG to refer you to the letter of the 26th March which the secretary of the
International Bankers' Commission addressed to the dean of the Diplomatic Body,
proposing certain alterations in the instructions conveyed to you in my letter of the
30th January, 1912,* and to inform you that the Diplomatic Body have agreed to
cancel Clause 6 of the letter of the 30th January, 1912, and to add to Clause 2 the
following sentence : —

Which clause will then read as follows : —

"The banks chiefly interested, viz., the Hong Kong and Shanghai Banking
Corporation, the Deutsch-Asiatische Bank, and the Russo-Asiatic Bank, shall be
custodians of the customs funds at Shanghai, but as soon as the service for the current
year of all loans contracted before 1900 is provided for by funds in these banks, then
the surplus shall be divided j^^'o rata till the end of 1913 amongst the banks having
charge of the indemnity service."

I have, &c.

J. N. JORDAN.

No. 21.
Sir J. Jordan to Sir Edward Grey. — {Received April 26.)

Sir, Peking, April 9, 1913.

AS T had the honour to inform you in my telegram of yesterday, the first
Parliament of China was formally inaugurated yesterday morning. I beg to enclose
the translation of a note from the Wai-chiao Pu requesting that this intelligence may
be conveyed to His Majesty's Government.

Although the event passed off smoothly and everything is quiet on the surface,
there is a strong under-current of friction and an apprehension of possible trouble.
It is when the formalities have been concluded and the two Houses proceed to business
that the trial of strength will take place. Yuan Shih-kai will in all probability be
elected President of the Republic, but an attempt will certainly be made, in framing
the constitution, to reduce his powers to a minimum. He may then have to choose
between accepting an ornamental position and asserting his claim to a real share in the
government. The impression at present is that he will have the support of the military
leaders in adopting the latter course.

I have, &c.

J. N. JORDAN.

See "China, No. 3 (1912)." No. 113

Enclosure in No. 21.

Mr. Lu Cheng-hsiang to Sin-rf. Jordan.
(Translation.)
Sir, April 8, 1913.

THE Parliament of the Republic of China having been formally established and
inaugurated with this day's ceremonies, I have the honour to inform your Excellency
accordingly, and to request that you will communicate the above to His Majesty 8
Government.

I avail, &c.

(Seal of Wai-chiao Pu.)

No. 22.

Sir J. Jordan to Sir Edward Grey. — {Received May 19.)

Sir, Peking, May 3, 1913.

WITH reference to my despatch of the 7th February, I have the honour to
transmit to you herewith a summary by Sir Somerville Head of the general state of
affairs in the provinces during the first quarter of 1913, which has been prepared from
the reports of His Majesty's consular officers.

I have, &c.

J. N. JORDAN.

Enclosure in No. 22.
Summary of Events in the Provinces during the first Quarter of 1913.

THE reports received from His Majesty's consular officers during the past quarter
reflect an improvement in the general situation from the point of view of security of
life and property. It is true that robber bands still continue their depredations in
numerous districts ; but the provincial authorities, who now have their troops under
better control, have been very active in repressing disorder. They have been hampered
in this task by the distress in the northern provinces resulting from the prolonged
drought and the discontent fomented in the southern provinces by secret societies which
combine politics with highway robbery.

On the other hand, while recovering their local authority, the provincial officials
have tasted the sweets of independence from the control of the Central Government,
and are in no mood to submit readily to the dictation of Peking. In one or two recent
trials of strength the Central Government has proved powerless to enforce its will, and
has submitted to the appointment to the higher provincial posts of local officials chosen
on the spot. How far this movement may eventually go it is yet too early to tell, but
much depends on the line of policy pursued at the present moment by President Yuan
Shih-kai.

Sliantung.

Apart from brigandage, which is more or less chronic in certain parts of Shantung,
the state of this province has been remarkably peaceful during the past quarter. There
have been no mutinies of any importance. The local revolutionary force at Chefoo has
been finally disbanded and replaced by 1,500 regular troops. A serious drought has
spoilt the prospects of the winter wheat and occasioned a certain amount of distress.
The authorities have recently prohibited the export of grain from Shantung and
provided for its import into the province free of duty. The drought tends to increase
the number of armed robberies, which still occur with some frequency in the neighbour-
hood of Tsaochow to the south-west and Loling to the north. Village volunteer corps
have been formed in many districts to relieve the regular forces of police duty and to
assist in the maintenance of order.

There has been much complaint recently regarding the working of the Tien-
tsin-Pukow Railway, the management of which is in Chinese hands. It is stated
that freight cars cannot be obtained without squeezes, and that they are often lefl
empty at one station when urgently needed at another. Travellers by the ordinary
trains are also exposed to much discomfort. The chief engineer is constantly

bringing these defects to the notice of the administration, but is merely informed
in reply that the railway is run for Chinese and not for foreigners, and that the
latter are under no obligation to make use of it. Nevertheless, the increased
facilities which the railway affords are largely increasing its revenue and incidentally
drawing off a portion of the trade from the hinterland of Tsingtau. The German
Shantung Railway, running from Tsinan to Tsingtau, until recently gave the latter port
a monopoly of the railbome trade of the province. The distance from Tsinan to Tien-
tsin is actually 40 miles less than from Tsinan to Tsingtau, and when the Tien-tsin-
Pukow Railway was built, merchants in the west of Shantung foimd it cheaper to
export via Tien-tsin, and the latter port quickly absorbed a large volume of trade that
had until then been considered outside its sphere. The German railway has now
declared a reduction of 40 per cent, on its freight charges to recover its traffic. It is,
of course, open to the Chinese railway to do the same, and the greater length of its
line, and, consequently, larger volume of trade that it will handle, together with the
advantages offered by its termini, will place it in a strong position should a rate-cutting
competition ensue with the other railway. Unless the Germans are able to extend
their line further into the interior, and tap the pi'ovjnces of Shansi and Honan — as it is
said they are endeavouring to do — in time the port of Tsingtau will have to content
itself with the trade of the immediate neighbourhood, which experience has proved to
be much less rich than was originally hoped. Moreover, branch lines have been
projected, linking up the various provincial centres of Shantung with the Tien-tsin-
Pukow Railway, and giving connection with Chefoo, now at last to obtain its much-
needed breakwater.

Manchuria.

The task of suppressing brigandage in the cereal-producing areas round Harbin
has been taken seriously in hand by the Chinese authorities, in response to repre-
sentations from the British and Japanese consular officers. Chinese official reports claim
the destruction of 929 brigands by fighting and execution. The same reports contain
circumstantial accounts of the manner in which the most notorious of the Hunghutzu
was first induced to bring his gang to the aid of the military in exterminating his
former associates, and then, after the successful termination of the operations, invited
to receive commendation from the commanders of the expedition, overpowered and
hacked to pieces with his following. It is hoped that by this means an effective blow
has been dealt against lawless activities in that neighbourhood.

Kiangsu and Anhui.

The border between Kiangsu and Anhui has been conspicuous for brigandage,
which here, as elsewhere, has been increased by the distress caused by the drought.
Chu-chou, on the railway, 25 miles from the terminus, attained such notoriety early in
the year that the Governor despatched some thousand troops thither. Their presence
had a salutary effect locally, but transferred the scene of trouble to another district.
This led to the moving of the military from the Chu-chou district, where troubles
at once recommenced, culminating in a serious disturbance on the 11th March,
arising out of the activities of the secret societies. The principal secret society in
the Lower Yang-tsze valley is the Nine Dragon Hill Society, which seems to be moved
by a general spirit of discontent, rather than by any definite programme of reform,
though it is also alleged to be anti-foreign. Many soldiers are said to be implicated in
the movement. The authorities both of Kiangsu and of Anhui have been most energetic
in seeking out and decapitating members of this society. The Nine Dragon Hill and
Sea Dragon Societies have branches at Chinkiang, Wuhu, and most of the ports of
the Lower Yang-tsze. The membership is chiefly composed of salt smugglers,
disbanded soldiers, and railway coolies, and it was these who were responsible for the
outbreak in Chu-chou. Some officers stationed there were also implicated. The
troops at Chu-chou were reinforced on the 12th March, and had no difficulty in driving
away the looters, who fled across the border into Kiangsu, since when matters seem
to have quieted down. The district magistrates in North Kiangsu have been provided,
provisionally, with power to hold Courts under military law for the trial of serious
cases ; and to report the proceedings direct to the Tutu, who may order these cases to
be dealt with as within the scoi^e of military law.

The well-to-do classes at Chinkiang, disgusted with the mismanagement of the
Government schools, are turning in large numbers to the missionary institutions. In
fact. His Majesty's consul notes an increasing tendency on the part of the Chinese

in that district to seek foreign aid and support in all important matters. In time
of famine the people there have learnt to expect foreign contributions and gratuitous
assistance from foreign missionaries. The conservancy of the Grand Canal is a matter
of supreme importance to Chinkiang and Yangchovi^, and the matter is being seriously
discussed ; but proposals f )r a loan from the chambers of commerce of the principal
towns interested find but feeble support, while the idea of a foreign loan is generally
accepted as the only solution. The security for such a foreign loan would be the taxes
on merchandise (" huewushui "), which are to replace the old U-kin. This new scheme is
to abolish all taxation on goods m transit, and replace it by production and destination
(or consumption) taxes, and it is now in full working order, at any rate in the area round.
Chinkiang.

Kiangsi.

The chief interest of the past quarter in the province of Kiangsi, centres round the
conflict between the provincial and central Governments. In January, OM'ing to the
independent attitude adopted by the Tutu Li Lieh-chiin, the president ordered the
detention of 7,000 rifles and about 3,000,000 rounds of ammunition which had been
landed in Kiukiang, having been ordered some time ago by the former Tutu of Kiangsi.
Li Tutu was not willing to submit to such a rebufi" and moved troops forward from
!Nanchang towards Kiukiang, where General Ko was prepared to throw in his lot on
the side of the Central Government. Li Tutu, on General Ko proving obdurate,
appointed Ou-yeng Wu to supersede him and took further military measures with a
view to compelling Ko to resign. On the 24th March a collision between Ko's troops
and those commanded by Ou-yang-Wu appeared inevitable. Altogether some 3,000
troops were converging on Kiukiang where Ko had at his disposal 1,500 men. Rumours of
reinforcements for both sides amounting to an open breach between north and south were
current in the Yang-tsze Valley. It was commonly believed that an active coalition had
been formed between the provinces of Anhui, Kiangsi, Kuangtung, Fukien, and possibly
Hunan, to resist the authority of Yuan Shih Kai and that civil war was imminent. Fortu-
nately, Wang Chih-hsiang, the oflicial deputed by Yuan Shih Kai to arrange the matter
of the munitions of war, was still in the province, and after some negotiation succeeded in
persuading General Ko to resign and leave Kiukiang. This wtis a further triumph for
the Kiangsi provincial authorities. In December last they refused to accept the civil
administrator appointed by Peking ; in February they threatened civil war unless
Peking withdrew the embargo on the munitions of war purchased by the Provincial
Government ; in March they again threatened recourse to arms, unless an ofiicer,
backed by the Central Government, were forthwith removed from his post. In all
three cases the Central Government, who claim to be able to enforce their will on the
provinces, submitted to the dictation of the Kiangsi officials. The latter now only
recognise the authority of Peking when it coincides with their own wishes. The
murder of Sung chiao jen, under circumstances which enabled suspicion to be cast by
their political opponents on the President and Premier at Peking, has further alienated
the sympathies of the Yang-tsze provinces and strengthened the movement towards
secession.

Kiangsi is also suflering from distress in the interior, due partly to the destruction
of a large proportion of the crops by the floods of last summer and partly to the
inclemency of the past winter.

Hupei.

In spite of a succession of disquieting rumours and some afirays between disorderly
soldiers and the city guards, tlie authorities have been successi'ul in preventing any
serious breach of the peace in Wuchang during the past quarter, but a strong feeling of
uneasiness as to the future exists among the inhabitants. The presence of a large
number of disbanded soldiers is the most dangerous factor in the local situation. The
riimours of impending trouble were particularly numerous towards the end of March,
and many of the merchant class thought it more prudent to leave Wuchang and take
up their residence in Hankow. On the nights of the 28th and 29th March special
precautions were taken and the city was carefully picketed, but no disturbances of a
serious nature actually occurred. A considerable force of Pei-yang troops have recently
been sent down to Hankow as a precaution against disafiecticn amongst the local levies,
and possibly, also, to strengthen the hands of General Li Yuan Hung in case of a
struggle with the south.

Serious rioting has been reported from other parts of Hupei, and bands of
disbanded soldiers returning to their homes have been guilty of many acts of violence.

His Majesty's consul at Ichang reports that lawlessness still continues in the
country districts. At Kiuchou, a former Manchu stronghold, there are some 15,000
Manchus in a state of destitution, and attempts to transport them to other parts of
the province have so far failed.

Honan, Shensi, and Kansu.

The long-continued drought in this part of China, resulting in a total or partial
failure of the crops, gives cause for considerable anxiety. A little rain has fallen
recently, but much distress prevails. The state of affairs not unnaturally tends to
increase the general disorder and swell the numbers of the robber bands. The country
round Honan-fu is said to be very disturbed. Trade is almost at a standstill, and
many of the merchants are leaving Honan altogether. The military authorities,
however, have been doing their best to disperse the robber bands wherever their
depredations have been excessive, and latest reports are of a more hopeful nature.

Szechuan.

The province of Szechuan would appear to be in the control of the secret
societies which continue to impose upon the peaceful inhabitants in the guise of
political parties in the Republican interest, while not disdaining at the same time to
share in the spoils of the more or less organised raids of the robber gangs affiliated
to them. Public attention at Chengtu has been concentrated during the past quarter
on the provincial elections to the Peking Parliament. The election of the thirty-flve
members to represent Szechuan in the Lower House was effected without serious
difficulty, but that of Senators for the Upper House, which had to await the settlement
of the internal affairs of the Provincial Assembly proved a tardy process. Of the
thirty-five members of Parliament for Szechuan, twenty-three are said to belong to the
Kuo Min Tang and twelve to the Kung Ho Tang. The result may be said to be less
representative of public opinion in the province than of a highly-organised party, whose
main object appears to be the obtaining of well-paid posts for its members. The Kuo
Min Tang favour the maximum of provincial autonomy, including the right to elect
their own Governor and choose their own executive officials. The Kung Ho Tang is
in favour of centralisation and willing to leave the appointment of Governor and
executive, officials in the hands of the Central Government at Peking.

Towards the end of February there was a mutiny of unpaid soldiers at
Ningyuenfu. Order was restored but no serious attempt made to punish the
ringleaders.

Various conferences have taken place at Chengtu between representatives of the
native converts who wish to manage their own church independently of the foreign
missionaries and the missionaries themselves. This independent church movement is
growing all over China, but the question of finance is at present the main stumbling-
block in the way of the Chinese converts.

Eastern Szechuan was also disturbed in the month of February by a deliberate
attack on the city of Wan Hsien by the Chengtu troops forming part of the garrison.
At best an ill-disciplined body , arrears of pay and rumours of their approaching dis-
bandment had brought about a state of mutiny in the ranks. Fifteen of the largest
firms and pawnshops were successively invaded and looted, and the men having
secured between 5,000 and 10,000 taels in silver, were only induced to return to
their barracks by a promise of 10,000 doUars from the townspeople. Further outrages
were averted by the payment of this sum, the troops concerned being also awarded an
additional month's pay as a gratuity. Some time elapsed before the authorities took
steps to bi'ing the ringleaders to book, but several of the chief offenders were eventually
shot and the disorderly company transferred to Chengtu.

During the looting no hostility to foreigners was displayed, but His Majesty's
consul at Chungking reports that a certain measure of irritation, which has found
vent in posters inveighing against the malicious designs of the foreign Powers for
the partition and enslavement of China, has lately made its appearance in Wan Hsien.

The reduction of the military forces of Szechuan has led to a recrudescence of
armed robbery and kidnapping in Nan Chuan, Ch'i Chiang, and other districts
bordering on the lawless province of Kueichou. A force sent from Chungking to
restore order was defeated by a strong band of brigands, and concerted action by
the military authorities of Kueichou and Szechuan was needed to suppress the general
disorder along the border. At present a party of soldiers is posted every 5 li along the

main roads, and conditions are so far improved that the Post Office is endeavouring to
reopen the parcel-post sei-vice to Kueichou, which has been interrupted since the
beginning of the railway rising of 1911.

Yunnan.

Very peaceful conditions have prevailed in the province of Yiinuan for some time,
and there have been no serious disturbances to record. The people appear to be
prosperous and contented, and the army — well paid and disciplined — has given no
trouble. The Provincial Treasury is reported to be practically empty, but funds are
forthcoming to provide for the current expenses of administration and even for the
purchase of munitions of war. The feeling of hostility towards the British on account
of their supposed aggressions on the frontier still exists amongst all classes of Ylinnanese,
and has a prejudicial effect on British interests in that part of China. His Majesty's
consul-general is endeavouring to counteract this, in some measure, by persuading the
local authorities to send a few students to the Hong Kong University out of the 100
which are to be sent abroad this year^

A society for the advancement of Buddhism in China has been established in
Yunnan-fu under the patronage of the local Government.

Kuancjsi.

Tiie political situation in Kuangsi luis remained quiet during the past quarter.
There are the usual reports of armed robberies by bands of brigands, especially in the
south-east and east of the province bordering on Kuangtung. But the Government
would seem to be doing its best to restore order, and captures of brigands are reported
almost daily. There has been no piracy on the upper portion of the West Kiver during
the past quarter.

Kuangtung.

The number of members to be sent by the province of Kuangtung to the Peking
Parliament is thirty. There are seven electoral districts. The third electoral district,
which includes Swatow, provides four members, and the total number of electors in the
district is 257,585. The Haiyang magistrate and others were denounced for
malpractices, but the cases against them were settled by compromise.

Circular instructions have been issued by the Canton Governor to the various
district magistrates directing the establishment of police in the villages without delay.
After three months an official inspection will be made, and the efficiency of the different
district magistrates will be judged according to their merits or the reverse. The
membership of the Triad Society is said to be increasing ; and another society, the
Eight Diagram Society, has also been fomenting trouble, but the military authorities
seem to be able to maintain control for the present. The latest advices from Canton
indicate that the Tutu and local officials are gradually strengthening their position.
Ajjpeals have been issued for some time past to Chinese abroad for funds for a campaign
in Mongolia, but it is more than doubtful whether the money received will be devoted
to this purpose.

At Pakhoi, in the south-west of the province, there has been a severe epidemic of
bubonic plague, which, owing to the general insanitary conditions of the port, seems
likely to increase in virulence during the present quarter. Many of the Chinese have
taken refuge in the surrounding villages, but the disease does not seem to be spreading
much to the interior ; though one or two cases have been reported from Limchow. The
latter district has also been the scene of some rioting out of the imposition of new
taxes. These disorders were suppressed with great brutality by Colonel Hsu Wei Yang,
who did not hesitate to make use of his troops for the purpose of levying blackmail on
unoffending villagers. Colonel Hsu has since been recalled, and the situation is now
more peaceful.

Fvkien.

In the beginning of February there was an attempt to assassinate the new civil
commissioner, Chang Yuan-chi, by means of a bomb placed on a bridge over which he
was passing. Chang noticed the bomb, and stopped his chair in time to save his own
life, but two of his bodyguard in front had their legs blown off. Bombs have also been
found in other parts uf Foochow, but otherwise there has been no serious disturbance.
The district round Foochow has been quite peaceful, and even Hsing Hua, usually in a
[1089] ^ E

state of unrest — and especially .so since the forcible uprooting of the poppy crop — is now
settling down to more normal conditions. His Majesty's consul at Foochow observes a
notable inclination among the natives to revert to idol worship and to the pre-Revolution
type of costume. The attitude of Fukien and Chekiang towards the Central Government
would seem to be rather more loyal than that of the other southern provinces, and it is
possible that, in the event of a conflict, they would take sides against the latter in
favour of Yuan Shih-kai.

No. 2.3.

Sir J. Jordan to Sir Edward Grey. — (Received May 19.)

Sir, PeMnrj, May 3, 1913.

I HAVE the honour to enclose copy of a note from the Wai-chiao Pu stating that
the United States Charge d' Affaires, Mr. Williams, under instructions from Washington,
conveyed to Yuan Shih-kai yesterday the formal recognition of the Republic of China
by President Wilson on behalf of the Government and citizens of the United States.

I have, &c.

J. N. JORDAN.

Enclosure in No. 23.
Wai-chiao Pu to Sir J. Jordan.

(Translation.)

Sir, Peking, May 2, 1913.

I HAVE the honour to inform your Excellency that Mr. Williams, United States
Charge d'Affaires at Peking, under instructions from the State Department, has on the
2nd May called upon the President of China and handed to him a telegram from the
President of the United States to the President of China formally recognising the
Republic of China on behalf of the Government and citizens of . the United States.

L avail, &c.

(Seal of the Wai-chiao Pu.)

No. 24.

Sir J. Jordan to Sir Edward Grey. — {Received May 26.)

Sir, Peking, May 8, 1913.

I HAVE the honour to transmit herewith copy of Yuan Shih-kai's oflScial reply
to President Wilson's message of recognition.

It will be noted that Yuan Shih-kai refers in the last paragraph to " the faithful
execution of all established obligations."

I have, &c.

J. N. JORDAN.

Enclosure in No. 24.
NeiDspaper Extract.

President Iuan to President Wilson.

THE following is President Yuan's official reply to his Excellency Woodrow
Wilson, President of the United States of America : —

In the name of the Republic of China I thank you most heartily for the message
of recognition which you have sent to me through your honoured representative in
this capital. The yentiments of amity and goodwill which it bespeaks, and the
expressions of greeting and welcome which it conveys, a< once testify to the American
spirit of mutual helpfulness, and add another brilliant page to the history of seventy
years of uninterrupted friendly intercourse between China and the United States.

Though unfamiliar with the Republican form of government, the Chinese people
are yet fully convinced of the soundness of the principle which underlies it, and which

is so luminously represented by your glorious cominon\vealtli. The sole aim of the
Government which they have established, therefore, is, and will be, to preserve this
form of government and to perfect its workings, to the end that they may enjoy its
imalloyed blessings — prosperity and happiness within, through the union of law and
liberty, and peace and friendship without, through the faithful execution of all
established obligations.

YUAN SHIH-KAI,
President of the Republic of China.

No. 25.

Sir J. Jordan to Sir Edward Grey. — {Received May 26.)

Sir, Peking, May 9, 1913.

IN October 1901 the Diplomatic Body were approached by the Wai-wu Pu
with a request that they would issue instructions to their nationals that the shops
and other establishments of foreign merchants in Peking must, in accordance with
treaty, be removed to one of the open ports.

In the previous month the legations had received identic notes to the effect
that in future Peking octroi would be levied on all foreign goods entering the
city, with the exception of those destined for the diplomatic missions or for the
legation guards. The Diplomatic Body, in reply to the above-mentioned note on
the subject of octroi, treated at the same time the question of the removal of foreign
commercial establishments from Peking. They notified their acceptance of the octroi
proposal on condition that the Chinese Government should not insist on their request
regarding the removal from Peking of the establishments of foreign merchants.
Here the matter rested until 1903, when Prince Ch'ing returned to the charge by
addressing to the Diplomatic Body a letter in which he again pointed out that Peking
was not an open port, and declared that in future foreign merchants woidd no
longer be at liberty to purchase houses or to open shops in the city. No reply was
returned by the legations to this communication. Later in the same year the
question again arose during the negotiations between China and Japan, and article 10
of the Supplementary Treaty of Commerce of 1903 reads as follows : —

" The high contracting parties hereby agree that, in case of and after the
complete withdrawal of the foreign troops stationed in the province of Chihli and
of the legation guards, a place of international residence and trade in Peking will be
forthwith opened by China herself."

During 1906 the Japanese Legation received protests from the Wai-wu Pu
regarding the opening of certain shops by their nationals, but on each occasion refused
the Chinese demand on the ground that the residence in Peking of foreign merchants
for purposes of trade had become a matter of historical usage.

Since 1906 the matter lay dormant until September last, when the Diplomatic
Body received from the Wai-chiao Pu a note reviving their previous demand for the
removal of foreign business establishments. The note, translation of which I have the
honour to enclose herewith, is couched in much the same terms as previous
communications on this subject, and is chiefly interesting as furnishing an additional
proof that the Chinese Hepublic is by no means behind the previous regime in its desire
to restrict by all means in its power the development of foreign commerce throughout
the country.

I have also the honour to enclose copies of the memorandum which is being
addressed by the Diplomatic Body to the Wai-chiao Pu in reply to their note of
September last. It will be observed that the heads of missions regret their inability to
comply with the proposal of the Wai-chiao Pu, and base that inability on the ground of
established usage.

I have, &c.

J. N. JORDAN.

[10S9] E 2

Enclosure 1 in No. 25.

Lni Cheng-hsiang to Sir J. Jordan.

(Translation.)

Sir, September 3, 1912.

THE inner and outer cities of Peking are not a port open to trade, and by treaty
foreign merchants may not open shops and warehouses there, but since 1900 foreign
merchants have, in contravention of the treaty, ventured to open stores and shops in
every part. During 1903 the former Wai-wu Pu repeatedly consulted with the foreign
representatives in Peking with a view to enforcing the treaty prohibition, and made it
clear that none of the shops or warehouses opened before that date would be ordered to
be closed, but that, with this exception, no others might be opened.

Now, a careful enquiry shows that foreign merchants during recent years have
again without authority opened stores and shops. This is a distinct breach of the
former understanding, but inasmuch as these merchants have brought their capital from
afar and are carrying on trade under difficult conditions, a sudden compulsory cessation
of their business might cause them loss and damage, and so some allowance should be
made. It has now been decided that all stores and shops opened by foreign merchants
prior to the 9th month of the 1st year of the Republic (September 1912) shall be
permitted to carry on business as usual, but they must observe the police regulations on
the same footing as Chinese merchants, and will receive the same protection, and in no
circumstances may any other stores or shops be opened. In the event of any such being
opened in future without authority in defiance of treaty they will be closed immediately
so as to comply with treaty provisions.

I have addressed (the various foreign representatives) on this subject, and I now
have the honour to request your Excellency for the honour of a reply and to hope that
British merchants will be directed to conform with the above.

I have, &c.
(Seal of the Wai-chiao Pu.)

Enclosure 2 in No. 25.
Memorandum communicated to Wai-chiao Pu.

HIS Majesty's Minister has the honour to acknowledge the receipt of the
Wai-chiao Pu's note of the 3rd September, 1912, in which the latter notifies that all
shops and stores opened by foreign merchants in Peking prior to the 9th month of the
Republic (September 1912) shall be permitted to carry on business as usual, but they
must observe the police regulations on the same footing as Chinese merchants, and will
receive the same protection, and in no circumstances may any other shops or stores be
opened.

In reply, His Majesty's Minister begs to state that, though the city of Peking has
never been opened, by virtue of treaty, to foreign trade, it has become the established
usage since the Boxer troubles for foreign merchants to reside and carry on business in
the inner and outer cities of Peking.

It is observed that there are stipulations in the notes exchanged on the 10th October,
1903, between the commissioners of Japan and China for treaty revision to the efiect
that after the withdrawal of the foreign troops a place will be designated outside of the
inner city of Peking for foreign trade whither foreigners scattered both within and
without the city walls shall be required to transfer themselves. No prohibition,
however, being expressed, it is inferred from the foregoing that until such designation
is made the fact of residence and trade of foreigners is accepted.

It is admitted that during 1903 the former Wai-wu Pu declared that none of the
foreign shops or warehouses opened before that date would be ordered to be closed, but
that with this exception no othel-s might be opened ; but the Diplomatic Body never
expressed its consent to the Chinese proposal.

The Chinese Government are therefore equitably estopped from objecting to the
continuance ot such residence and trade of foreigners already in Peking, and cannot
justifiably object to other foreigners enjoying the privilege already conceded to their
compatriots and other nationals.

Under these circumstances His Majesty's Minister regrets that he is unable to
comply with the Wai-chiao Pu's proposal on the subject.

Peking, April 28, 1913.

No 26
Sir J Jordan to Sir Edward Grey. — {Received May 30.)

Sij. Peking, May 13, 1913.

I HAVE the lionom- to forward herewith translation of a memorandum from the
Wai-chiao Pu on the subject of foreign loans.

You will observe that the Chinese Government decline to recognise any loans to
public or private bodies in any part of China from foreign merchants, in which
railways or mines which are the property of the State are given as security, without
the consent of the Central Government having been obtained.

I am circulating a copy of this communication to His Majesty's consular officers
for the information of British merchants.

I have, &c.

J. N. JORDAN.

Enclosure in No. 26.
Wai-chiao Pu to Sir J. Jordan.

(Translation.)

Sir, Peking, May 6, 1913.

I HAVE the honour to observe that the late Manchu Government, and that of the
Republic, have on many occasions informed the Diplomatic Body that in cases where
foreign loans are made, whether by provincial officials for public requirements, or by
merchants for undertaking railways or mines, the consent of the Central Government
must first be obtained, and the latter will officially inform the Diplomatic Body for
purposes of record ; and further, that the foreign merchant making the loan must first
inform his Minister at Peking, who will enquire whether the loan has the consent of
the Chinese Govermnent, only after which may the loan actually be paid over.

On the 30th November of last year a presidential order was received stating that
it was essential that our financial plans should form a united whole, and that in future
all matters concerning loans should come luider the direction of the Minister of
Finance. On the 2nd December the contents of this order were communicated to all
the Ministers at Peking, and they were requested to inform merchants of their
respective nationalities.

It is evident that the object of the Chinese Government in making the above
repeated declarations as to the method of contracting loans throughout the country
was not merely to secure the solidity of our internal finances, but to protect the
interests of foreign merchants who might advance money : this should be credited by
all foreign merchants I have now the honour again to declare that the Government
will refuse to recognise any loans by public or private bodies in any part of China from
foreign merchants in which raihvays or mines which are public property are given as
security for which the consent of the Central Government has not been obtained, and
this whether or no an agreement has been drawn up. Where cases of this sort occur,
and foreign merchants as a result suffer financial losses, the Government will not
undertake the responsibility of obtaining compensation for them.

I have the honour to communicate this to your Excellency, and to request you to
instruct merchants of your nationality accordingly, in order that they may strictly
observe the regulations laid down. By doing so you will assist in the maintenance of
friendly relations.

I avail, &c.

(Seal of the Wai-chiao Pu.)

No. 27.

Sir J. Jordan to Sir Edward Grey. — {Received May 30.)

Sir, Peking, May 13, 1913.

I HAVE the honour to report that Deputy-Speakers of the Senate and of the
House of Representatives have now been elected, and that, with the election of these'
officers, the National Assembly may be regarded as a properly constituted body.

so •

On the 2nd and 4th instant respectively the Chinese Republic was formally
recognised by the Republics of Mexico and Cuba.

I have, &c.

J. N. JORDAN.

Ho. 28.
Sir J. Jordan to Sir Edward Grey. — {Received June 2.)

Sir, Peking, May 19, 1913.

I HAVE the honour to report that two Presidential Orders, dated the 2nd and 7th
instant, have been published which, though couched in somewhat veiled language, are
regarded by the Chinese as containing a warning to the southern agitators and an
avowal of the President's intention to resort to coercion should the necessity arise.
The overt action which has followed the issue of the mandates is a significant
indication of the Government's intention to crush any attempt at insurrection. The
northern troops which were posted at Hsinyang, on the borders of Honan, have been
moved down to Hankow, and preparations are being made for transporting the 6th
division to a point on the Yang-tsze where it will be in a position to overawe Kiangsi.
Information to this effect reached me some days ago, and I. duly apprised Vice-Admiral
Jerram by telegram of the proposed movements. The President and his advisers seem
to consider that a displaj^ of force will be sufficient to effect their object, and thej^
anticipate no organised resistance, although they admit the possibility of sporadic
outbreaks. But if, as would appear to be the case, their intention is to remove the
governors of Kiangsi and Anhui and replace them by adherents of their own party, the
situation may at any time assume a serious complexion. The south may not have much
military force at its command, although the 8th division at Nanking would probably
rally to its side, but it can always refuse to remit supplies and greatly hamper the
Central Government by a policy of passive resistance.

The root cause of all the trouble is the essential difference in the political outlook
between the north and south. Men like Sun Yat Sen and Huang-hsing have really
nothing in common with Yuan Shih-kai and the older class of officials. The former extol
constitutional methods and wish to make their application" a means of curtailing the
powers of the President. The latter see little virtue in a Parliament which has become
a veritable pandemonium, and continue to govern the country to a large extent on the
old lines. The problem is now, as it was in the days of the revolution, how to unite
the north and south in a common policy for the general good. The Shanghai leaders,
realising, perhaps, their own weakness, seem willing to meet Yuan Shih-kai half-way.

Moderate men like Li Yuan Hung issue passionate appeals to both parties to lay
aside their differences, but their influence has no perceptible effect upon the Assembly.

I have, &c.

J. N. JORDAN.

No. 29.

Mr. Alston to Sir Edward Grey. — {Received June 23.)

Sir, Peking, June 7, 1913.

WITH reference to Sir .John Jordan's despatch of the 27th March last, I have
the honour to forward to you herewith copies of further correspondence with the
Wai-chiao Pu, concerning the regulations for the election to the National Assembly of
deputies to represent Chinese resident abroad.

I have, &c,

B. ALSTON..

Enclosure 1 in No. 29.

Memorandum communicated to Sir J. Jordan hy Wai-chiao Pu,

THE Wai-chiao Pu has the honour to acknowledge receipt of Sir John Jordan's
letter of the 27th March to the effect that he had been instructed by His Majesty's
Principal Secretary of State for Foreign Affairs to inform the Chinese Government that

His Majesty's Government entertained strong objections to the policy of the regulations
issued for the election of representatives to the National Assembly by Chinese resident
in British colonies.

The Ministry forwarded the above communication to the bureau for the organisation
of Parliament, and has now received the following reply from the latter : —

" The reason for the election (of representatives) of Chinese resident abroad is to
be found in the repeated demands, owing to their affection for the mother country, of
citizens of the Chinese Kepublic who have settled in various parts of the world for this
right, for which they applied to the Government and the (provincial) Assemblies.
Hence the National Council decided upon the method of election by them of senators.
Each Chamber of Commerce of Chinese settlers abroad was permitted to elect one
elector, these representatives to form the ' Chinese Settlers' Election Association.' As
the latter was to be formed at the seat of the Government of the Repviblic, its formation
by its members was a matter concerning the internal government of China, and did
not conflict with the sovereign rights of the countries in which its members were
settled. As for the word ' election,' it was merely the universal custom of public
nomination which was employed. Article 22 of the Detailed Rules for the Election of
Senators shows clearly the intention of the method adopted. The public nomination
by the settlers was similar to the custom of public nomination of suitable officers as
chairmen of associations, guilds, bureaux, and societies which has existed for many
years. Until the arrival of the nominees at Peking and the formation of the association,
their status was simply that of the customary representatives of Chinese settlers ; they
could not be considered either as members of the association or as electors.

" To sum up, inasmuch as the election by Chinese settlers took place at the seat
of Government of the Republic, it does not affect the sovereign rights of the countries
in which they were settled. As for the members of the Chinese Settlers' Election
Association, they were nominated according to the custom previously existing in the
case of chairmen of associations, &c., and the formal method of election was not
employed. Thus a difference existed (between the method employed) and that in use
in China for the election of administrative officials, and for this reason it is still more
clear that the method employed did not injure the sovereign rights of the countries
in which the Chinese settlers lived."

It appears to the Wai-chiao Pu from the above that it is clearly explained that the
election (of representatives) of Chinese settlers abroad does not prejudice Great Britain's
right of governing her dependencies. The Ministry trusts Sir J. Jordan will com-
municate the contents of the above to His Majesty's Principal Secretary of State for
Foreign Affairs for his information.

(Seal of the Minister for Foreign Affairs.)

Peking, May Ifi, 1913.

Enclosure 2 in No. 29.
Memorandum communicated to Wai-chiao Pu by Sir J. Jordan.

HIS Majesty's Minister has the honour to acknowledge the receipt of the
Wai-chiao Pu's memorandum of the 16th May with reference to the election of members
of the National Assembly representing Chinese resident in British colonies.

It appeal's fi-om this memorandum that the Chinese Government is under the
impression that the British Government's objection is merely to the method by which
the election of these representatives was effected. His Majesty's Minister would assure
the Wai-chiao Pu that such is not the case ; His Majesty's Government has a fimda-
mental objection to the whole principle of representation of Chinese subject to British
law in the Parliament of a foreign country, and the method of election is a detail which
in no wise affects this opinion. Whether by the present method of election or by any
other, it is impossible to avoid a state of affairs in which the Chinese Government
exercises interference in regions which are under the British Crown. Chinese citizens
in British colonies, like the subjects of other nationalities, are amenable while they
stay there to British law, and cannot be allowed to import into the country of their
domicile the political controversies and domestic rivalries of their country of origin.

His Majesty's Minister is communicating the Wai-chiao Pu's memorandum to His

Majesty's Government, but he deems it necessary to correct without delay the
misapprehension which underlies the reply of the bureau for the organisation of
Parliament.

Peking, May 28, 1913.

No. 30.
Mr. Alston to Sir Edward Grey. — {Received June 28.)

Sir, Peking, June 12, 1913.

I HAVE the honour to report that the President issued an order on the 9th
instant dismissing the Tutu of Kiangsi.

The province of Kiangsi has defied the Central Government for many months past,
refusing to accept officials appointed from Peking or to remit any revenue to the capital,
and generally posing as the champion of provincial autonomy in its most extreme form.
At the same time the Tutu of the province has figured as the most militant of the
supporters of the southern party, headed by Sun Yat Sen and Huang Hsing.

Until assured of funds Yuan remained passive and carried the policy of patience to
the extreme limit, for no one knows better than he the disastrous effect of an unfulfilled
threat on the Chinese mind. As soon as the success of the reorganisation loan rendered
the northern army mobile he issued warning orders to the recalcitrant provinces, at the
same time moving troops to Hankow and the Yang-tsze to Isack the orders if necessary.

Kiangsi at first attempted to retaliate, and the Tutu moved his troops to positions
facing those occupied by the northern forces, but the neighbouring provinces of Anhui
and Hunan showed little or no disposition to join him in fighting for Nationalist
principles, and the Pi'esident felt the time had come to launch the order for his dismissal.

It is too early yet to judge of the amount of opposition which this decisive action
will call forth, though it is reported that the Kiangsi troops have already withdrawn
from the Hupeh frontier to Kiukiang. Angry protests and minor conflicts may be
expected, but it is not probable that one province will attempt the unequal task of
resisting the strong northern force which is prepared to make the Central Government's
mandate effective.

The President for his part is not likely to push matters to extremes once the
offending Tutu is removed ; in fact, the signs of compromise are discernible in the
new appointments to provincial posts which accompany the order of dismissal, most of
the nominees being members of the Nationalist party and subordinates of the ex-Tutu,
while for the time being the Tutuship is entrusted to Li Yuan-hung at Wuchang.

The gauntlet has been thrown down, and by the measui-e of success which attends
the coercion of Kiangsi may be gauged Yuan Shih-kai's chances of gaining control over
the southern provinces generally.

I am keeping in touch with Vice-Adrairal Jerram and have asked him to arrange
for a gunboat to be stationed at Kiukiang for the preseiit, but His Majesty's consul
reports that all is quiet there and that no danger is apprehended to the British
community resident at that port and at the neighbouring summer resort of Kuling.

I have, &c.

B. ALSTON.

No. 31.
Mr. Alston to Sir Edward Grey. — {Received June 30.)

(Telegraphic.) Peking, June 30, 1913.

CHINESE Government desire to pay off arrears of indemnity up to 31st December,
1912, in sterling in London on 3rd July out of the proceeds of the Reorganisation Loan,
and request to be informed of the sum due, so that they may instruct banks
accordingly.

If you agree to this course please telegraph total amount payable in sterling,
including interest, to 3rd July.

No. 32.
Sir Edward Grey to Mr. Alston

(Telegraphic.) Foreign Office, July 3, 1913.

YOUR telegram of 30th June.

Amount of balance up to 31st December last, with interest on arrears up to
3rd July, is 229,333L 8s. 5cL

No. 33.
Mr. Alston to Sir Edward Grey. — {Received July 15.)

(Telegraphic.) Peking, July 15, 1913.

MY despatch of the 12th June.

As the Kiangsi troops showed signs of disaffection, northern troops were moved
into the province to overawe them, with the result that a collision occurred not far
from Iviukiang and Kuling, the neighbouring foreign sununer resort. His Majesty's
consul at Kiukiang reports that there is no reason to consider foreign lives and property
in danger, and that several foreign gunboats are in port.

• No. 34.
Mr. Alston to Sir Edward Grey. — {Received July 16.)

(Telegraphic.) Peking, July 16, 1913.

FIGHTING appears to be outcome of insurrectionary movement which has been
smouldering in the Yang-tsze for some time. The Tutu of Anhui, recently made to
resign by Yuan Shih-kai, has been invited to return by Anhui troops, who decline to
serve under the new Tutu. The Kiang-si Tutu, who had also been dismissed, is
leading revolt.

Other provinces are reported to be about to join movement.

No actual fighting appears to have occurred since 13th July.

No. 35.
Mr. Alston to Sir Edward Grey. — {Received July 17.)

(Telegraphic.) Peking, July 17, 1913.

THERE are signs that the insurrectionary movement is spreading. The Nanking
Tutu has been made prisoner by local forces, and has made a formal notification of the
independence of Kiangsu to the consuls at Shanghai.

1 am informed that the President still considers it essential for the solvency and
integrity of China that power should be centralised. His Excellency is confident that
the reduction of Kiangsi to submission will be effected shortly.

No. 36.
Mr. Alston to Sir Edward Grey. — {Received July 18.)

(Telegraphic.) Peking, July 18, 1913.

LATEST reports from His Majesty's consuls in Yang-tsze Valley are that move-
ment is a military one, led by the notorious Huang Hsing and recently dismissed Tutus
of Canton, Anhui, and Kiangsi provinces.

So far no other provinces than those of Kiangsu and Kiangsi have formally joined
revolt. Avowed object is to crush Yuan Shih-kai. Northern troops holding their
own so far. Admiral proceeding to Shanghai.

[1089] F

No. 37.

Mr. Alston to Sir Edward Grey. — (Received July 19.)

Sir, Peking, July 4, 1913.

WITH reference to Sir John Jordan's despatcli of the 7th March last, I have
the honour to report that the International Bankers' Commission at Shanghai have
forwarded to the dean of the Diplomatic Body their report for the period from the
1st February to the 31st March, 1913, showing the appropriation of revenue recei^^ed
by the ftiaritime customs during that period.

The net revenue collected from the 1st February to the 31st March amounted to
6,287, 877'52 taels, or an average per month of 3,143, 938'76 taels, against a monthly
average of 3,311, 764'36 taels for the previous quarter.

Payment of loan instalments of principal and interest amounted to 2,261,802"24
taels ; all instalments due up to the 31st March having been paid off.

The indemnity instalments up to the 30tli April, 1912, have been remitted by all
the banks.

I have, &c.

B. ALSTON.

No. 38.

Mr. Alston to Sir Edward Grey. — [Received Jtdy 19.)

Sir, Peking, Jidy 4, 1913.

I HAVE the honour to report that the " Peking Daily News " has published
a summaiy of the Budget for the first six months of 1913, which has been before
the Chinese Parliament. Though the figures given are merely estimates compiled
for the consumption of the House of Representatives, they may be taken to reflect
more or less the present state of China's finances. The deficit shown for the present
half-year is 117,486,572 dollars or nearly 12,000,000L The receipts, which only
amount to 51,336,880 dollars (over 5,000,000L), do not of course take into account
payments received from the Reorganisation Loan, which should reduce the item of
79,199,844 dollars (8,000,000L) for national debts by more than half. On the other
hand, as far as administrative expenditure is concerned, the 5,500,000L allotted by the
<juintuple group for this purpose is to cover the expenses for the six months from April
to September inclusive, and, therefore, two-thirds of this cannot be apportioned to the
relief of the anticipated deficit for the first half of this year, while an extra interest
charge of 1,250,000L per annum will have to be found on account of this loan.

The financial situation thus revealed is therefore a serious one, especially when
it is remembered that the present budget only includes the actual expenditure of
the Central Government, and that the provincial Governments are all living far beyond
their means. Thus the total expenditure of the Ministry of War which is put at
22,836,758 dollars (or 3,000, OOOL), only provides payment for the troops, about 70,000,
which are under their present control. The remainder, about four times that number,
are living on the provinces in which they are quartered, and being paid out of salt and
land revenues which should by rights be forwarded to Peking. After repeated urgent
telegraphic requests to the various provinces the Government appeal's to have extracted
from them reluctant promises that a total sum of 18,501,846 dollars (l,900,000Z.) should
be remitted between January and June. The sources of these_ contributions are
not mentioned, but the largest amount promised by any province is 5,370,531 dollars
{over 500,000L) from Kiangsu— a province which is supposed to produce more than
three times this sum a year in salt revenue alone. The annual contributions promised
under the loan agreement, pending the reorganisation of the salt gabelle were
as follows : —

Chihli— 1, GOO, 000 taels (240,000L) secured on the land tax, the tax on title deeds,
and the taxes on spirits and tobacco.

Honan.— 2,400,000 taels (360,000L) secured on the land tax, grain tribute, and tax
on title-deeds.

Shantung.— 2,4:00,000 taels (360,0001) secured on the land tax, grain tribute,
Lien-ch'ing native customs revenues, tax on tobacco and spirits.

7^ian(^SM.— 3,600,000 taela (540,000L) secured on the land tax, grain tribute,
and li-kin.

The above four provinces have contributed their full quota but it is hardly to be
expected that they will desire to continue indefinitely to shoulder the burden ol the
Xle country. Kuangtung. especially, having been foremost m advocating the
establishment of a republic, not only contributes nothing towards the common funds
but is ceaselessly pressing Peking for money to redeem its depreciated paper issues, for
navment of troops and for admmistrative expenses. , t> i • 4.1.^

^ There is of course the political reason for this. By remitting money to Peking the
southern provinces would merely strengthen the ascendancy of the north to which they
are imXcably opposed ; while for Peking to have remitted money to the now dismissed
Tutus of Kianis?, Anhui, and Kuangtung, would have been to provide them with
the sinews of war against the Central Government. ^- . j +^

Only three salt districts are mentioned in the budget, and they were estimated to
produce the following sums during the first half of the year :—
" dollars.

Changrlu salt district .. .. •• •• •• ^'fj^^tl

Shantung }«"'"""

Fengtien llo.uuu

making a total of 1,867,542 dollars (200,0001.). It wiU doubtless be a long time before
Te Central Government are able efiectively to contest the right claimed and exercised
by the southern provinces of retaining the salt revenues collected by them for purposes

^''^I'L'TtSSd -receipts of the Peking octroi are given as 453,380 d<^lars. The
postal service is expected to yield 40,620 dollars. The railway department budgets for
a deficit of 8,830,000 dollars (900,000L), while 1,000,000 dollars has been allotted to

''' Th^tcfi^Kl'he customs are estimated at 29,706,701 dollars (3,000,0001) for

^^^Ts°thf figures for the actual expenditure and revenue lor the same period of
last year were not available, it is impossible to make any comparison or to test the
p" bJble accuracy of the sums mentioned above. That the G-^.^-^^^^tToinW
necessity for economy is shown by the issue of numerous presidential orders eniommg
the strictest retrenchment in all departments and by their genume anxiety to obtain
control over the financial transactions of the provmces. The present Reorganisation
Loan will at most allow the nation a breathing space, and unless ^^^e reorganisation ot
the salt gabelle can be efi"ectively carried out, China will be left without any tangible

security to offer for future national loans.

•' I have, &c.

B. ALSTON.

No. 39.

Mr. Alston to Sir Edward Grey.— {Received July 20.)

(TeWraphic ) Peking, July 20, 1913.

FUKIEN made a declaration of independence to-day, and Kuang-tuug on the

^^*^Hrs\laiesty's consul-general at Canton reports that the Kuomintang prompted
the action of Kuang-tung, and that all the local authorities of the province belong to

*^'^ It°irreported that Shanghai Arsenal has been evacuated by the northern troops
recently sent to garrison it, an arrangement having been come to with the southerners.
Wusuna; fort is also held by the latter. , -,,. ot_ x \. a

The northern troops have been successful both on the Kiangsu-Shantung border
and in neighbourhood of Kiukiang. Hostilities are at present confined to these
districts. It is doubtful whether the Chinese fleet will remain loyal.

No. 40.

Mr. Alston to Sir Edward Grey. — {Received July 21.)

(Telegraphic.) . Peking, July 21, i9lS.

I SENT the military attache to Hankow on his way to Kiangsi, where Hostilities
are in- progress. He reports as follows : —

[1089] * ^

" General Li- yuan-hung has informed me that Hanyang and Wuchang are securely
lield by northern troops on whom he can rely. There is no reason to apprehend
danger to foreigners or troubles similar to those which occurred during the revolution.

" The northern troops are a match for the Hunan ese troops, who are, however,
concentrated and will probably fight. The Hukow forts at Kijikiang are being
attacked by the northern troops. Chang-hsun has won a victory at Hsu-chow and is
advancing south. If the northern troops are successful at Kiukiaug they will march
to Nanking to co-operate with Chang.

" General Li-yuan-hung appears to think that the northern arms will soon be
entirelv successful."

No. 41.

Mr. Alston to Sir Edward Qrey. — (Beceived July 21.)

(Telegraphic.) Peking, July 21, 1913.

SHANGHAI arsenal to-day still in northern hands, and orders have been issued
for the immediate payment of the fleet.

No. 42.

Mr. Addis to Foreign Office. — {Received July 22.)

Hong Kong and Shanghai Banking Corporation,
Sir, 31, Lombard Street, London, Jxdy 22, 1913.

I HAVE the honour to enclose copy of a telegram which we have received to-day
from the Peking representatives, authorising the groups to pay to the various Powers
the indemnity arrears up to the 31st December, 1912.

I shall be glad to receive your instructions with regard to the payment of the
British portion.

I have, &c.

C. S. ADDIS.

Enclosure in No. 42.
Copy of Telegram from Peking, July 21, 1913.

FOLLOWING for the five groups :—

" You are authorised by Finance Minister to pay indemnity arrears due to various
Powers up to 31st December, 1912, with accrued interest at 4 per cent, per annum to
date of payment, on the understanding that claims for any differences will be adjusted
with respective Governments as soon as completed statements have been presented by
them to Chinese Government and found correct."

Amounts due on 31st December, 1912, as per statements handed to us by Finance
Minister, are-
Great Britain

Portugal ..
Sweden ..

Russia

International claims

Japan

France

Spain

Belgium ..
Italy

Holland .,

Germany ..
Austria

America . .

f s.

., 224,835 0

409 14

279 0

. 676,210 12

G64 15

. 148,473 15

Fr.

. 7,870,466

15,025

942,152

, 2,955,475

. 41,617-94 guilders.

8,147,984

09 marks.

426,226-

65 kronen.

. 723,730 -06 gold dollars.

No. 43.
Mr. Alston to Sir Edioard Grey. — (Received July 24.)

('J'elegraphic.) Peking, July 24, 1913.

ATTACK on Shanghai arsenal by rebel troops has been in progress for last two
days, but has been repulsed by garrison of Government troops aided by fleet in river.
Considerable damage is reported to have been done to foreign property in line of fire.

^"o decisive action has been fought either on Kiangsu border or in Kiangsi, but,
so far, advantage lies with Government troops, and President informed me on the 2 1st
that he had no doubts as to the ultimate result.

No. 44.
Mr. Alston to Sir Edward Grey. — (Received July 29.)

(Telegi-aphic.) Peking, July 29, 1913.

SITUATION in Kiangsi.

The military attache, who is proceeding to Nanking to-day, reports that part of the
2nd division is temporarily held back in Hupei, but that the scheme outlined in his
previous telegram (see my telegram of the 21st July) is being carried out. The Hukow
forts were captured on the 25th July with very slight loss to the army and none to the
navy. The rebels retreated south much demoralised. Their losses are unknown. On
the 26tli July Takutang was captured. The northern troops are advancing on
Nanchang, via the Poyang Lake and Nankang-fu. They are co-operating with the troops
coming down the railway to attack the rebels near Tehan, the terminus. The rebels
have their best troops in this area, but the northern troops are superior and are certain
to win. He hears that there are only 500 troops at Nanchang, and that the arrival of
the northern troops will be welcome to the inhabitants.

No. 45.

Mr. Alston to Sir Edward Grey. — (Received July 30.)

(Telegraphic.) Peking, July 30, 1913.

LATEST reports tend to show that the oppo.sition of the Southern forces is
persisting. Southern army on Kiangsu border is in retreat towards Pukow, and a
portion is stated to have joined Northerners. Shanghai arsenal continues to repulse
rebel attacks and should shortly be relieved by Northern reinforcements which arrived
yesterday. Latter are expected to attack Woosung forts. During the fighting round
the arsenal, property in the Settlement was damaged by shell-fire, and complete chaos
prevailed in native city. Both Settlement and Chapei are now imder control of the
municipal volunteers and of naval forces landed from international fleet.

Hunan has declared for the South, but has not yet actively intervened in the
struggle. Central Government continue confident that they can deal with the
situation.

No. 46.
Mr. Alston to Sir Edward Grey. — (Received July 31.)

Sir, Peking, J%ily 16, 1913.

WITH reference to my despatch of the 4th instant, I have the honour to enclose
herewith a statement showing the revised estimates of the Chinese budget for the first
six months of 1913, based on the actual figures submitted to the audit bureau.

From the amounts placed to the credit of the various Ministries between January
and June, it will be seen that an economy, on paper, has been effected of upwards of
30,000,000 dollars, or 3,000,000?. The largest reductions made by the Cabinet were in
the Ministries of Industry and Commerce and of the Navy.

With regard to the revenues it is pointed out, perhaps rather optimistically, that

the amount of the receipts for the first half of the present year are liltely to be the
miuinuun which is collected by the Central Government ; and that China's linancial
salvation depends upon the ability of the Central Government to enforce the collection
and remittance to the national treasury of those taxes which have alwaj^s been regarded
as national, as distinct from provincial, revenue. It is this centralising policy of the
Chinese Government which is being put to the test at the present moment.

I have, &c.

B. ALSTON.

Enclosure in No. 46.

Newspaper Extract.

The Budget and Economy.

WE have received from the Audit Bureau a letter which throws further light upon:
the summary of the budget for the first half of the current year, which was published
a fortnight ago. The figures therein given were the amounts which appeared in the
printed volume submitted to the Lower House, but it is explained that this volume
was compiled at the end of 1912, and included provision for various reorganisation
work which it was the intention of the Government to pay for from the large loan.
Early in March, as the Reorganisation Loan was not concluded, and the prospects of
its being arranged were indefinite, the estimates of expenditure contained in the
budget were reconsidered, and considerably reduced by, the Cabinet. It was not then
possible to submit them to the National Assembly, as it had not been organised. The
following table shows the estimated expenditure in the original budget, the sums
reduced by the Cabinet, the estimates authorised by the Cabinet, and the monthly
estimates from the Ministries received by the Audit Bureau :—

Difference between Estimates

reported to the Audit Bureau

Original
Estimates.

Keductions

Estimates

and those authorised by the

Ministry.

made by the

authorised by

reoeired by the

Cabinet.

the Cabinet.

Audit Bureau.

Increase.

Decrease.

Dollars.

DoUars.

Dollars.

AViii-cliiao Pu

2,033,143 00

2,033,143 -00

2,081,075 -103

47,932 -103

Interior

2,135,701 -00

2,135,701-00

2,151,168 -325

15,467 -325

Finance

90,630,104 00

67,353 -200

90,562,750 -10

8,56ii,5K2 -460

81,999,188-400*

Education ....

6,2«7,631 -00

2,304,842 -000

3,982,809 -00

2,413,652 -832

1,569,156-168

War

22,836,758 '00

3,366,287 -405

19,470,470 -59

20,607,535 -425

1,137,064-830

Navy

9,954,204 -00

7,403,290 -000

2,5.50,914 -00

1,986,4«2 -498

564,431 -502

Justice

1,102,035 00

426,001 -CXX)

676.034 -00

971,724 -000

295,690 -000

Agriculture and

2,914,553 -00

2,147,736 -000

766,817 -00

444,086 -544

322,730-015

Forestry

Industry and Com-

13,018,724-50

11,550,931 -000

1,467,793 -50

4,549,630 -866

3,031,837 -366+

merce
Communications

17,499,647 00

4,276,076 000

13,223,571 00

711,727 -985

....

12,511,343 -OlBt

Total

168,412,520 -50

31,542,516 -605

136,870,003 -89

44,480,646 -038

4,577,991 -624

96,967,349 481

* This sum represents what the Q-ovemnient has to pay during the first six months of 1913 on foreign loans
(76,769,842 dollars) and on domestic loans (2,440,608-81 dollars).

+ This sum, intended principally for the erection of iron-works, was refused.

X The figures submitted to the Bureau of Audit provide only for actual expenses of the Ministiy.

From the above table it will be seen that the Cabinet reduced the estimated
expenditure from 168,412,520 dollars to 136,870,003 dollars, a difference of
31,542,516 dollars. The monthly estimates of expenditure received by the Audit
Bnreau from the various Ministries only amount to 44,480,646 dollars, but this is due
to the fact that 81,999,188 dollars due during the first half-year upon foreigii and
domestic loans, and 12,511,843 dollars for railway and other expenses of the Ministry
of Communications, did not figure in these estimates. If these sums be added to the
44,480,646 dollars, the total will be approximately the amount sanctioned by the
Cabinet.

The exact expenditure of each Ministry cannot be known until all accounts for the
first half of the year have been received and checked by the Audit Bureau, but the

following amounts have been placed at the credit of the various Ministries between
Januar}' and June : —

Dollars.

Ministry of Foreign Affairs . . . . . . . . . . 2,050,000

„ Interior .. .. .. .. .. .. 2,150,000

„ Finance .. .. .. .. .. .. 89,()00,0i)0

., Education .. .. .. .. .. .. 3,500,000

„ War .. .. .. .. .. .. 20,000,000

Navy .. .. .. .. .. .. 2,200,000

Justice .. .. .. .. .. .. 800,000

„ Agriculture and Forestry . . . . . . . . 600.000

„ Industry and (lommerce . . . . . . . . 1,500.000

„ Communications . . . . . . . . . . 13,000,000

Total .. .. .. .. .. .. 134,800,000

So that, compared with the figure of 168,412,520 dollars — the estimated expendi-
ture submitted to the National Assembly — economies amounting to upwards of
30,000,000 dollars have been effected, and the expenditure actually sanctioned by the
Cabinet has not been exceeded.

With regard to the actual receipts of the Central Government, no returns are yet
available. It will be remembered that the Budget estimated the total revenue during
the half-year at 51,336,880 dollars only. However, we may say that the amount of
receipts for the first half of the second year of the Republic is the minimum that will
be collected by the Chinese Government. The reasons are obvious. The administra-
tion, completely disorganised by the revolution, has not yet been restored to its normal
condition, and the Government has not received the regular remittances from the
provinces upon which it could formerly rely. The condition of provincial finances is
now being subjected to rigorous examination, and we can only repeat the opinion that
has been so emphatically expressed recently, that China's financial salvation depends
upon the ability of the Government to enforce the collection and remittance to the
National Treasur\^ of those taxes which have always been regarded as national, as
distinguished from provincial, revenue.

No. 47.
Mr. Alston to Sir Edward Grey. — {Received August 3.)

(Telegraphic.) Peking, August 3, 1913.

SOUTHERN rebellion in China : General situation.

Central Government continue generally successful in Yang-tsze Valley. Rebel
forces based at Nanking are retreating down Tien-tsin-Pukow line, and two divisions
will probably desert to northerners. Northern forces in Kiangsi are driving the rebels
towards Nanchang, and latter are not expected to offer serious resistance. Kuling is
no longer within area of operations. Rebel attacks on Shanghai arsenal have been
discontinued during the last four days. Woosuug forts remain in the hands of the
south, but their capture is expected shortly. Position in Hunan and part of Hupei
doubtful, but the President is confident that he will completelj'' control Yaug-tsze
Valley within a month.

The troops in Kuangsi province are still loyal ; they have advanced down the
West River and are in toucii with the rebel forces at a point 40 miles above Canton.

No. 48.
Mr. Alston to Sir Edward Grey. — (Reeeived August 5.)

Sir, Peking, July 21, 1913.

THE struggle between President Yuan Shih-kai on the one side and the Huang
Hsirig faction on the other has now materialised in an open rebellion in the Yang-tsze
Valley.

In the first week of July the dismissed Governor of Kiangsi, Li Lieh-chun
returned to Hukon, took over the forts which command the entrance to the Poyang
Lake, and raised the standard of revolt. Vice-President Li Yuan Hung, the Governor
of Hupei, who had been entrusted since Li Tutu's dismissal with the additional duties
of the Governor of Kiangsi, ordered the 5,000 northern troops who had during the

previous weeks been concentrated on the Hupei-Kiangsi border to advance on the
linkou position. The advance of the northerners was opposed by such of the Kiangsi
troops as had thrown in their lot with Li Lieh-chun, and an engagement took place at
Te An, between Kiukiang and Hukou. The fighting, which lasted from the 12th to the
13th July, would appear to have been of an indecisive nature. Since the above date,
the strength of the rebels in Kiangsi has been considerably augmented by the defection
from the northern cause of Ou-yaug Wu, the military official who had been appointed
Protector of Kiangsi on Li Tutu's dismissal. On the 18th July he resigned this post
under the Central Government, and declared himself Governor of Kiangsi, to which
position he had, he said, been elected by the provincial assembly of that province. The
secession of Kiangsi thereby became a fait accompli, and it would appear probable that
the entire provincial military forces have ranged themselves in the rebel camp.

According to information received last night, and communicated to you in my
telegram of the 21st Jnly, Vice-President Li is hurrying troops down the river to
reinforce the 5,000 men mentioned above, and is confident that this combined force
will find little difficulty in reducing the Hukou position.

While ex-Tutu Li thus opened the rebel campaign at Hukou, Huang Hsing had
proceeded to Nanking. The Kiangsu troops in that place Avent over to him in a body.
The Governor, Cheng Te-chuan, who expressed himself as oiit of sympathy with the
rebellion, was placed under restraint, and a proclamation was issued on the 14th July
imder his name and seal, declaring Nanking's independence of the Central Government.
The Kiangsu troops at Hsuchoufu, situated on the Tien-tsin-Pukow line near the
Shantung border, also declared for the Nanking Government, Avhile the soldiers
at Chinkiang and Yangchou remained for the moment undecided.

On the 15th the Nanking troops, 7,000 strong, moved north by train to attack the
2,000 loyal troops stationed at Hanchuang on the Shantung frontier. The two forces
met at Li-kuo-I, where an engagement was fought on the 16th July. The southern
armj' was said to have been driven back with considerable loss. At this engagement
General Chang Huen, of revolution fame, who is stationed at Yenchoufu wdth an army
of 10,000 men, declared his hand by despatching 2,000 of his troops to assist the
northerners. Since the 16th July no further fighting has apparently taken place, both
sides being engaged in sending reinforcements to the scene of operations.

On the ISth July the troops at Yenchoufu and at Chinkiang definitely threw in
their lot with the rebels. On the 19th, 1,200 troops with six machine guns left the
latter place and entrained for Shanghai, which is about to become the third field of the
operations of the rebel forces. Their objective would appear to be the arsenal, which
is Jield by Admiral Cheng and some 1,300 northern troops. There are in addition
several Chinese men-of-war moored in the vicinity. Steps having now been taken to
secure the issue to the crews of pay now in arrears, there is reason to believe that these
ships will take part in the defence of the arsenal. The Wusung forts have hoisted the
rebel flag.

While I am without information of any actual military operations in parts of
China other than the above, His Majesty's consular officers report the issue of
declarations of independence in the provinces of Kuangtung, Fukien, and Chekiang.
The t^vo latter provinces have up to the present shown no signs of wishing to take the
field in support of the rebel cause. It is, however, rumoured to-day that Kuangtung
is sending troops north to assist in the attack on the Central Government.

There is no indication whatever that the revolt in the south has any anti-foreign
tendencies, nor has any information reached me so far of any attempt on British life or
property.

I have the honour to enclose herewith translation of a memorandum which has
been addressed by the Wai-chiao Pu to all the foreign Ministers in explanation of the
'attitude adopted by the Central Government towards the present crisis.

I have, &c.

B. ALSTON.

Enclosure in No. 48.

Memorandum communicated to Mr. Alston hy the Wai-chiao Pu.

FROM the establishment of the Republic the Provisional Government has for a
year past devoted itself unceasingly to the restoration of order and the promotion of
union, on which depend the peace and existence of the State. Foreign Governments
have continued the transaction of international business with this Government without

interruption, and commercial and financial business has steadily increased. Althougk
sincerely desirous to discharge punctually obligations in respect of foreign indemnities
and loans until order has been completely restored throughout the whole country,
financial expansion is impossible, and a return to normal conditions cannot be
secured.

The Government has gone deeply into this matter, and has accordingly spared no
effort to promote progress in the direction indicated, but the conviction has been
reached that as long as order is lacking union is impeded, and the disbandment of
unnecessary troops, the unification of the currency, and the arrangement of the finances
can none of them be proceeded with.

This state of affairs cannot but have an adverse effect on foreign trade, so that both
the law-abiding Chinese and the friendly Powers have alike cause for complaint.

Recently there has been a divergence of view amongst the officials in the south>
where, though patriots are not lacking, there are also those who use force for their own
ends and rejoice in tlie ills of others. In the case of these latter, the Government
cannot but consider means of removing them in order that the localities in question
may obtain good officials and that the State may be benefited.

Unfortunately rebels have made a pretext of these measures for creating
disturbance, and have resorted to arms, treating as enemies the forces of the officiating
Tutu stationed in their own province, and regarding as an alien power a Government
acknowledged by the whole country- ; they have led troops to oppose the loyal and
destroy the Republic, thus exposing once again to dire hardships the populace only
just recovered from the terrors of war, and they have incurred the hatred of the
merchant classes whose business has been thrown into confusion.

The Government has despatched troops to the south, and these isolated disturbances
should not prove difficult of suppression ; at the same time cherishing humane desires
and aiming at a friendly solution, it is anxious to spare the localities the ravages of
war, if only this internal disorder may soon be put down and trade be restored.

The members of the National Assembly and the Chambers of Commerce of the
various provinces have demanded that the rebellion be immediately suppressed, and
the Government, in face of this popular mandate, cannot but proceed to take all
necessary steps to this end.

The above represents the attitude which the Government has, to its regret, been
forced to adopt towards this internal disturbance, and as the Powers, in view of the
increasingly friendly relations, will doubtless be concerned at these events, the Wai-
chiao Pu has the honour to communicate this exposition of the actual circumstances.

(Seal of the Minister for Foreign Affairs.)

July 20, 1913.

No. 49.
Mr. Alston to Sir Edward Grey. — (Received August 9.)

Sir, Peking, July 25, 1913.

I HAVE the honour to transmit herewith a copy of a report which has been
addressed to me by the military attache at His Majesty's Legation respecting the
military situation on the Yang-tsze.

1 have, &c.

B. ALSTON.

Enclosure in No. 49.

RepoH by Major Robertson on the Military Situation on the Yang-tsze.

Hankow, July 21, 1913.
SIR WILLIAM WILKINSON, His Majesty's consul-general, Hankow, very
kmdly arranged for my visiting General Li Yuan Hung at Wuchang, and accompanied
me there yesterday. As the present unsettled conditions on the Yang-tsze resemble the
revolutionary disturbances of 1911, which necessitated the employment of foreign troops
at Hankow, it was important to obtain some data on which to base an opinion on
nnhtary grounds as to w^hether such conditions were likely to be repeated. The object
of my visit to General Li was therefore to obtain information as to whether disturbances
[1089J G

"were likely to arise among the Hupei soldiers in the neijjhbourhood of Wuchang,
Hankow, and Hanyang ; whether the Northern soldiers now in this district were in a
position to suppress any such disturbances ; whether danger was to be apprehended
from Hunan ; and, if so, whether the forces at General Li's disposal were capable of
dealing with an invasion of the province by Hunanese troops. Connected with these
questions was the prospect of an early success by the Northern troops over the Chiang-
hsi forces, which might enable these troops to deal with disturbances in Hupei, or
to assist in quelling rebellion at Nanking.

General Li was extremely frank on all these points. He stated that Wuchang,
Hankow, and Hanyang, were not in danger from disturbances among the Hupei troops,
as these had been distributed in different parts of Hupei, only a few being left at
Hanyang, &c. The three Wuhan cities iire securely held by reliable troops who are
strong enough to deal with any local disturbances. These troops are distributed
as follows : —

The following units of the IHrd Northern Division which had just arrived
from Peking : —

In Wuchang : —

12th Infantry Regiment, 1 squadron 3rd Cavalry Regiment, 1 battalion
3rd Artillery Regiment, the 1st Regiment Infantry of the "Kiaugnan
Division quartered in Hupei."
In Hanyang. —

The 3rd Regiment Infantry of the " Kiaugnan Division quartered in Hupei,"
a regiment of Hupei troops.
At Hankow. —

(Kilometre 10.) A depot for forwarding troops to Chiang-hsi, usually
containing Northern troops on their way thither. From my own
observation this depot should be able to contain about 2,000 troops.
In addition to these troops, the 2nd Manchurian Mixed Brigade was
stated by General Li to be guarding the Peking-Hankow line.

The " Kiangnan Division quartered in Hupei " was stated by General Li to be
quite reliable. The division consists of three infantry regiments only, one of which
consists mostly of Kuang-hsi men, another was raised in Chiang-su during the
revolution from Shantung men who formed part of the old Chiang-su provincial
troops, and the remaining one contains men from Anhui and other Northern provinces,
with some Yiinnanese. The Division is under General Li Tien Tsai, a Yiinnanese
who formerly held a military command in Kuang-hsi. During the revolution he was
put in command of these mixed forces, who received the name of " Kiangnan Division
quartered in Hupei."

With regard to the question of Hunan, General Li stated that trouble might
be expected from this quarter, but that the Northern troops would without any doubt
be able to deal with any Hunanese troops which might enter Hupei. He had a poor
opinion ot the Hunanese troops after his experience of their conduct in evacuating
Hanyang during the revolution.

I have not, so far, been able to visit Hunan, and, therefore, cannot offer an opinion
at first hand as to the value of the Hunanese troops. They have, however, always
been reported on by previous mihtary attaches as good troops, and have had a good
reputation generally ;is fighters. A large percentage of the military forces of the
provinces south of the Yang-tsze are recruited from Hunan, and those individual
Hunanese soldiers whom I have seen at various times certainly appeared to be good
fighting material. During the revolution the Hunanese supplied large numbers of
recruits for the revolutionary forces, and there is at any rate one good formed body in
Hunan available, the 31st Regiment of the Vlllth Division of Nanking. This division,
which is reported to have rebelled, is the best of all the units of the former revolutionary
forces on the Yang-tsze. It is, therefore, a question how far General Li's optimism as
to the certainty of crushing, with the troops at present near Wuchang, an attack by
Hunanese on Hupei is justified. The blowing up of the Chanj^sha magazine will
•undoubtedly hamper the Hunanese. General Li referred to this incident, and though
he did not say so, it is quite likely it was prearranged. Should, however, the troops
near Wuchang be insufficient, the situation elsewhere may admit of further Northern
reinforcements being sent to repel the Hunanese, either from the north, or from
Chiang-hsi when the Chiang-hsi troops have been defeated.

General Li had every confidence in the abihty of the Northerners to defeat the
Chiang-hsi troops. He stated that the TInd and Vlth Divisions were now concentrating
near Kiukiang for an attack on the Hukow forts, and that there was not the least doubt
tliat tliis would be successful. The Vlth Division (probably about 10,000 strong) are
now nearly all concentrated near Kiukiang, and the Ilnd Division is now being sent
daily in lighters and launches to Kiukiang, so that an attack may shortly be expected.
General Li stated that the Northern troops had been successful in the fighting that had
hitherto taken place, but only three battalions were, he stated, engaged.

The plan which General Li hopes to carry out is to capture first of all the Hukow
forts and then when these, and Kiukiang, have been put in a state of defence against
recapture, the Northern troops after leaving a garrison in Chiang-hsi will proceed to
Nanking to co-operate with Chang Hsiin. The latter, General Li stated, had obtained
a victory near Hsii-chou Fu and was advancing on Nanking.

General Li was extremely optimistic as to the early and ^^omplete success of the
Northern troops against any forces the Southerners could bring against them. He
belittled the effect the rebellions of distant provinces such as Szechuan might have,
stating that their intervention would be too late to be of any use.

No mention was made of the navy, but unless the navy remains loyal, and until
the Yang-tsze forts are secured by Yuan Shih-kai, it is of course obvious that the
employment of the Ilnd and Vlth Divisions to deal with Nanking, and afterwards
if necessary, with Hunan would not be practicable. With the navy loyal, and the
Yang-tsze forts secured, the possession of interior lines gives the Northerners an
immense advantage in dealing with such widely separated forces as those of the various
Yang-tsze provinces.

D. S. ROBERTSON, Military Attache, Peking.

No. 50.

Mr. Alston to Sir Edward Grey. — {Received August 9.)

(Telegraphic.) Peking, August 9, 1913.

THE general situation is unchanged. As far as the Lower Yang-tsze Valley is
concerned the power of the rebels has apparently been broken. The northern troops
are, however, making very slow progress in Kiangsu and Kiangsi, and the rebels, who
are in considerable force near Nanking and Nanchang, have sustained no decisive
defeat. They will be paid off out of loan funds on their surrender, which is expected
shortly.

At Canton the situation is verj^ obscure. Kuangsi troops are on the West River
at Samshui, and are reported to be waiting for ammunition. Fighting has been in
progress between the rebel forces in the town, but on the advance of the loyal forces
they will probably combine. The concessions are being protected by troops from
Hong Kong.

Hupei has been invaded by Hunan troops in the rebel interest. The independence
of Eastern Szechuan has been declared by a division at Chungking which has revolted.
The forts at Wusung are being attacked by northern troops, and the arsenal at Shanghai
has been relieved. The Diplomatic Body are allowing the northern forces to reoccupy
Chapei at the request of the Chinese Government.

No. 51.

Mr. Alston to Sir Edward Grey. — {Received August ] 1.)

Sir, Peking, July 28, 1913.

IN my despatch of the 21st instant I had the honour to report on the opening-
of the campaign which is being led by Huang Hsing and the dismissed Tutus of
Kiangsi, Anhui, and Kuangtung against the Provisional President.

Since the above date nothing has occurred which would lead me to change my
opinion that the movement is primarily due to personal animosity felt by the above
individuals for Yuan Shih-kai and to the desire of the Kuo Min Tang party to obtain
a share of the higher and more lucrative offices of State from which they have been
excluded. Beyond the military forces of Kiangsi and Kiangsu the movement appears
to remain unsupported by any serious element of the Chinese population. The masses
[1089] G 2

remain apathetic, and it is probable that the hirge majority of workers throughout the
country rest in ignorance that an attack on the Central Government is inprogress.
The provinces of Fukien, Chekiang, and Kuangtung have, it is true, declai-ed their
independence. They have, however, refrained up to the present from offering armed
assistance to the rebel forces in the field. The past week has, on the other hand,
not been without signs that the bulk of the articulate elements in the country are
prepared to support — -at least by words— the policy of a strong centralised Government.
A large number of the high provincial authorities have addressed to the President
messages of adherence to the established regime, while chambers of commerce and
merchants' guilds throughout the country have not been backward in expressing
abhorrence of the attempt to overthrow the Provisional President. Even in Kuangtung
the commercial elemenis, a minority of the officials and a proportion of the army
have dared to express themselves in the above sense, and it is not, I venture to think,
too much to say that the country as a whole strongly favours return to a settled
regime, which it believes to be possible only under the guidance of Yuan Shih-kai.

With regard to the military situation, the trend of events during the past week
has been favourable to the Northern forces.

In Kiangsi the rebels have been dislodged from the Hukou forts and have
withdrawn towards Nanchang, the provincial capital. Reinforcements, numbering
6,000 men and 12 guns, have been despatched to the Northern army since the
beginning of the outbreak.

The adjacent province of Hunan has declared its independence, but is apparently
adopting an attitude of neutrality, and has despatched -3,000 troops to Yochow with a
view to preventing a possible inroad of Northern troops from Hankow. That Hunan
will take an active part on either side appears improbable, owing to the recent
destruction by fire of the Changsha arsenal together with the arms and ammunition
which it contained.

Reports regarding military events in Kiangsu are conflicting, but I gather that the
initial success of the Northern army, reported in my despatch of the 21st July, was
followed by a considerable accession of strength to the rebel forces, who were enabled
to reoccupy Li Kuo Yi and the adjacent hills. On the 22nd July, however, General
Chang, who appears to have been strongly reinforced, again dislodged the rebels, and
the following day saw the Northern army in possession of Hsuchow-iu, the Southerners
retreating to P'eng P'u — the point where the Tien-tsin-Pukow Railway crosses the
Huai River. At this point the rebel army remains entrenched, and should shortly be
attacked by General (Jhang's army advancing down the railway and by a further
Northern force which is converging on the same point from the west.

While the troops at Chinkiang definitely threw in their lot with the rebels on the
18th July, there is reason to believe that the general in command at Yangchow has
reconsidered his position and is now inclined to favour the North. His Majesty's
consul at Chinkiang has reported that an attack on that place is threatened by the
Yangchow troops, and has expressed apprehension lest the small Southern force
remaining there should be driven by the Yangchow troops to take refuge in the
British concession. Measures have been concerted with the naval authorities to guard
against the entry of refugees into the concession.

The most serious efforts of the rebel forces have been concentrated on an attempt
to capture the arsenal at Shanghai defended by Admiral Cheng and some 1,500
'Northern troops. A number of Chinese warships have co-operated with the defenders,
who have successfully repulsed attacks made on the nights of tbe 23rd, 24th, 25th,
and 26th July. Hunanese and Chekiang troops are said to have lately reinforced the
assailants, while two transports containing 3,000 Northern troops and escorted by five
men-of-war are due at Shanghai to-day.

Reports which I have received from His Majesty's consul-general point to heavy
fighting in this area of operations. Shells fired by the rival forces have fallen both in
the international settlement and in the Chinese city, causing some loss of life and
considerable damage to property. Owing to nervoiisness among the European
residents of the settlement and to something approaching panic among the Chinese
inhabitants of the native city, it was thought necessary to call out the volunteer force
on the opening of hostilities against the arsenal. In view of the possibility of a
decisive defeat, followed by the" dispersal of the Southern troops and an influx of
refugees into the settlement, it has been thought desirable to strengthen the civilian
force, and parties from the foreign warships anchored in the river have been landed
for this purpose. No loss of British lives or damage to British property has been
reported to me as having been caused during the various attacks which have beea

made on the Slianghai arsenal by the rebel forces. I am happily able to report the
same absence of casualties from the other areas in which hostilities have been in
progress during the past week. One incident only affecting British property lias
been brought to my notice. On the 26th instant the British steamer " Kutwo " while
proceeding down river was fired on by Chinese troops when opposite Chinkiang. In
company with His Majesty's ship " Woodcock " the vessel returned to the scene of the
incident, explanations were demanded, and an ample apology offered. No damage
was sustained by the " Kiitwo," nor any casualties among her crew.

The position of the foreign colony at Ruling has continued to occupy the attention
of His Majesty's Legation. Warships of at least four nationalities continue in touch
with a signalling party which was sent up to that place at the beginning of last Aveek,
and should be amply sufficient to cope with am^ situation which may arise.

I would add, in conclusion, that the revolutionary movement continues its course
without showing any indication of the existence of anti-foreign feeling.

I have, &c.

B. ALSTON.

No. 52.

i¥r. Alston to Sir Edward Grey. — {Received August 13.)

(Telegraphic.) Peking, August 13, 1913.

WOOSUNG forts taken this morning.

No. 53.

Colonial Office to Foreign Office. — {Received August 15.)

Sir, Downing Street, AuguM 14, 1913.

I AM directed by the Secretary of State for the Colonies to transmit to you a
copj' of a telegram from the Governor of Hong Kong on the subject of tlie situation in
China.

I am, &c.

JOHN ANDERSON.

Enclosure in No. 53.
Governor Sir F. May to Mr. Harcourt.

(Telegraphic.) [Received August 8, 1913.]

CANTON situation remains unsettled.

The commandant has resigned the Governor-Generalship, and has been succeeded
by another military officer, who is hostile to Yuan Shih-kai and to General Lung.
Lung has not advanced.

There have been some collisions between rival factions of troops, and there is
some danger of riot. Two hundred Punjabis have been sent to Shameen as
reinforcements,

No. 54.
Mr. Alston to Sir Edwatd Grey. — {Received August 15.)

(Telegraphic.) Peking, August 15, 1913.

GENERAL situation.

Rebellion may non be considered as virtually collapsing. Considerable northern
army is now facing Nanking from the opposite side of the river, few rebels remain in
the town, and it is improbable that these will offer serious resistance. Shaughai-
Wusung area has been completely cleared of rebel forces. There has been lighting at
Chinkiang, but loyal Yangchow division is now in occupation, and southerners have
apparently dispersed. Hunan has olficially renounced its independence, and no fighting

ias apparently taken place either on Hnnan-Hiipei border or in the latter province.
Independence of Eastern Szechuan, proclaimed by the troops at Chungking, has also
been withdrawn.

General Lung has entered Canton with Kuangsi troops, and controls the situation.

No. 55.

Mr. Alston to Sir Edward Grey. — {Received August 18.)

Sir, Peking, August 3, 1913.

I HAVE the honour to report that papers have recently been laid before the
Diplomatic Body by the Wai-chiao Pu in connection with the disturbances in Southern
Chma, and the endeavours of the Chinese Government to safeguard itself against the
complicity of foreign subjects with the leaders of the rebel cause.

In reply to a note, dated the 24th July, requesting the expulsion from the inter-
national settlement at Shanghai of the rebel leaders Huang Hsing and Chen Chl-mei,
in order that the settlement might not be used as a base for disturbances, the
Wai-chiao Pu was informed by the Diplomatic Body that the Consular Body had
already taken steps to that efiect. An identic note was addressed to me, and I issued
instructions to the consuls ofl&ciating at ports where British concessions have been
established, to prevent the proscribed leaders from concealing themselves within the
areas under our control.

In response to representations from the "Wai-chiao Pu that code telegrams,
purporting to be sent by foreign merchants were being utilised by the rebels at Kiukiang
for the purpose of fomenting trouble, I instructed His Majesty's consul as a
temporary measure to attach his signature and official seal to all telegrams which were
despatched in code by British merchants at that port.

On the 25th July martial law was proclaimed at Peking, and the Wai-chiao Pu
requested that ; (1) violent characters should not be peimitted to make use of the
legation quarter as a refuge ; (2) that letters and telegrams despatched from the legation
quarter, other than those of the legations and the banks, should be subjected to official
censorship by the Chinese; and (3) that foreign subjects residing outside the quarter
should be held responsible for the observance of orders issued under martial law.

At a diplomatic meeting on the 28th July it was decided that clause (1) was actually
provided for by the protocol of 1901, no Chinese other than those in the employ of
foreigners having the right to reside within the legation quarter ; that clause (2) could
not be accepted, but that code telegrams from commercial houses should be franked by
the official seal of their legations during the period of disturbance ; and that no measures
could be taken to enforce clause 3 until the nature of the orders in question had been
communicated by the Chinese Government.

A question of broader interest was raised by a note from the Wai-chiao Pu of the
25th July, in which the approval of the Diplomatic Body was sought for certain
regulations drawn up with a view to the prevention of the complicity of foreigners with
the present revolt.

The Chinese Government proposed (]) that the houses and vessels of foreigners
sliould be subject to search, under warrants vised by a consul, should one be in the
vicinity ; (2) that any war materials which might be discovered should be submitted to
the trial of a prize court ; (3) that foreigners assisting the rebels in the districts under
martial law should be captured and punished, the trial and punishment to be in the
hands of the Chinese alone should the capture be effiscted within the fighting zone.

After careful consideration of the question the Diplomatic Body was unable to
accept the representations, which in their opinion jeopardised the rights of foreigners as
assured by treaty, and in his reply to the Wai-chiao Pu the dean expressed the view
that any case in which a foreigner was accused of complicity with the- rebels should
be dealt with in accordance with treaty stipulations.

1 have, &c.

B. ALSTON. •

No. 56.

Admiralty to Foreign Office. — (Received August 20.)

Sir, Admiralty, August 18, 1913.

I AM commanded by my Lords Commissioners of the Admiralty to transmit
herewith, for the information of the Secretary of State for Foreign Affairs, an extract
from a letter, dated the 25th ultimo, which has been] received from the Commander-in-
chief China, respecting the state of affairs in China.

1 am, &c.

W. GRAHAM GREENE.

Enclosure in No. 56.
Vice-Admiral Jerram to Admiralty.

(Extract.)

Sir, E.M.S. " Alacrity," at Nanking, July 25, 1913.

I HAVE the honour to report that "Alacrity" arrived at Nanking on the
22nd July, and 1 transferred my flag to her from " Flora."

2. Although I now have a wireless chain from Hankow to Shanghai, the wireless
work is found to be very difficult ; the Chinese shore stations still accept telegrams,
but it is quite problematical whether they send them through, and in any case a delay
of some days is to be expected. Consequently evei-ything has to be done bj- wireless,
and the consular authorities at all the ports look to the ships to transnait their
messages, besides the large amount of naval work going on.

With the ships of five nations (British, American, German, Japanese, and French)
thus competing against each other, the I'esult was confusion, and I have arranged with
the other nations that the twelve hours of day and night shall be allotted, two to each
nation exclusively and the remaining two for general use.

3. The situations at the three centres of the fighting are at present as follows : —

Nanhing.

The opposing forces are at Peng-pu, on the Tien-tsin-Pukow Railway line, about
100 miles north of Pukow. It seems probable that the northern army will drive back
the southern army on Pukow, and, as the latter hold the railway line, they should be
able to effect their retreat without any difficulty, perhaps destroying the line
behind them.

The danger here lies in the possibility of a routed and demoralised southern force
arriving in Nanking unpaid and unfed, and ready to start looting. Apart from this,
there is no reason to anticipate disturbances in Nanking itself.

The southern wounded are being sent down in considerable numbers, and there is
only very indifferent medical aid for them.

I have offered the services of our medical officers, and they have been accepted
but not made use of yet. The Chinese said they would send word when they
desired them.

Shanghai,

Southern attacks on the arsenal close to Shanghai take place nightly, and so far
have failed completely. The Chinese ships there have been taking part with the
northerners in the defence of the arsenal.

The Shanghai international corps of volunteers has been called out for the defence
of the settlement, if required, and the British and foreign ships there are prepared to
land armed parties.

I have ordered " Monmouth " and " Hampshire " to Wusung — as near to Shanghai:
as they can go — and " Welland " and " Usk " to Shanghai itself.

"Newcastle," "Ribble," and " Woodlark " are already at Shanghai, so the British
naval force there will be a strong one.

Kiukiang.

The northern troops are meeting with general success, and appear to be driving
the southern troops before them with slight opposition. No change has been reported
during the last forty-eight hours.

4. I have beard from Hong Kong that trouble is feared at Canton. The " Otter "
and " Fame " have been sent there, the latter taking twenty marines.

I have, &c.

T. H. M. JERRAM.

No. 57.
Mr. Alston to Sir Edward Grey. — (Received August 23.)

(Telegraphic.) Peking, August 23, 1913.

CRITICAL situation has arisen at Chengtu owing to 1st division having thrown
in their lot with Chungking rebels, against whom they were sent. They are said to be
marching on Chengtu. General Yin, at Yachow, has been threatened with death
unless he declares against the Government, which he is expected to do at any moment.
Other towns have also revolted.

One division of troops from Yiinnan-fu, intended for pacification of Hunan, have
been diverted to Szechuan. Foreigners so far all safe.

No. 58.
Sir C. Greene to Sir Edward Gi'ey. — (Received September 6.)

(Telegraphic.) Tokyo, September 6, 1913.

IT is reported that some Japanese have been killed at Nanking, and that Japanese
houses have been pillaged by Chinese troops. This is causing some excitement in the
press. The Japanese Government have instructed their consul at Nanking to furnish a
report, and will await its receipt before coming to any decision. They are treating"
the question calmly.

No. 59.

Sir G. Greene to Sir Edward Grey. — (Received September 7.)

(Telegraphic.') Tokyo, September 7, 1913.

NANKING incident.

The Director of the Political Division of the Foreign Office has been assassinated,,
presumably as a protest against the attitude adopted by the Foreign Office. This com-
plicates the situation. It is not impossible that there may be serious developments
unless prompt satisfaction is granted.

No. 60.
Mr. Alston to Sir Edward Grey. — (Received September 8.)

Sir, Peking, Atigust 23, 1913.

I HAVE the honour to report that the International Bankers' Commission at
Shanghai have .forwarded to the Dean of the Diplomatic Body their report for the
quarter ended the 30th June last, showing the appropriation of revenue received by
the Maritime Customs during that period.

The total revenue collected from the 1st April to the 30th June amounted to
10,500,118'74: taels, or a monthly average of 3,500,039"58 taels, compared with an
average of 3, 14.3,938" 7 6 taels for the previous two months. Payment of loan instalments
of principal and interest amounted to 8,674, 664'84 taels, all instalments due up to the
30th June having been paid off. The balance on hand with the three custodian banks
on the 30th Jtine amounted to 8,197,591 '11 taels.

No payments were made during the past quarter on account of the indemnity, and
a total amount of 1,104,059*94 taels appeared at the credit of the Commissioner of
Customs' " Chinese indemnity account " with the various banks.

I have, &c.

B. ALSTON.

No. 61.
Sir C. Greene to Sir Edward Grey. — {Received September 9.)

{lelegrapMc.) Tokyo, September 9, 1913.

NANKING incident.

Owing to the illness of the Japanese consul he has not yet reported to his Govern-
ment, and some delay is expected. A demonstration, conducted principally by students,,
took place on Sunday in front of the Foreign Office. There was no violence.

No. G2.
Sir C. Greene to Sir Edward Grey. — {Received September 11.)

(Telegraphic.) Tokyo, September 11, 1913.

NANKING incident.

Strong articles have appeared in one or two responsible newspapers to-day
advocating immediate action if full satisfaction is not given by China. There was a
big mass meeting yesterday at a theatre. No disturbance took place, but speeches of
a fiery character were made.

No. 63.
Sir C. Greene to Sir Edward Grey. — {Received September 14.)

(Telegraphic.) Tokyo, September 14, 1913.

NANKING incident.

The Chinese Government have undertaken to comply with practically all the-
demands of the Japanese Government. It is hoped that one or two outstanding
points may shortly be satisfactorily dealt with.

Above communicated to me officially.

No. 64.
Sir C. Greene to Sir Edward Grey. — {Received September 17.)

(Telegraphic.) Tokyo, September 16, 1913.

NANKING incident.

The Minister for Foreign Affairs informs me that Yuan Shih-kai has given assur-
ances that satisfaction will be granted, but as public opinion is much excited, the
Government have been compelled to instruct the Japanese Minister at Peking to press
for prompt action by China. Three indignation meetings will take place to-morrow.
His Excellency added that the departure of additional ships reported in to-day's paper&
was decided on some time ago, and that it is not a demonstration against China.

No. 65.

Sir G. Greene to Sir Edward Grey. — {Received September 22.)

Sir, Chuzenji, September 6, 1913.

A GOOD deal of excitement has been aroused in the press by the telegraphic
reports of the killing of some Japanese and the pillaging of Japanese houses on the
occasion of the recent entry of the Chinese troops under General Chang Hsun inta
Nanking. Thus, it is alleged that Japanese stores and hospitals were pillaged although
they were flying the Japanese and Red Cross flags ; that a party of Japanese going^
to their consulate were attacked, three of their number being killed ; that many-
Japanese are missing ; that the Japanese flag was insulted ; and that pillage and
anarchy were prevailing everywhere. I lost no time in enquiring yesterday of the
Ministry lor Foreign Affairs what truth there was in the above reports, and was
[1089] H

informed in reply by the Vice-Minister that the newspaper paragraphs were inuch
exaggerated. Mr. Matsui said that, as far as the Ministry Jvnew, it was the case that
three Japanese had been murdered and that the houses of all the Japanese in Nanking
had been plundered. There had been no control of the troops, who were barbarous
and ignorant as to flags, &c., and a state of anarchy had existed. All the Japanese
subjects had, however, taken refuge in their consulate, and order was being restored
by the troops of General Fang, who was punishing the pillagers, who belonged to the
forces of General Chang.

The Japanese Government had, Mr. Matsui said, instructed the Japanese consul
at Nanking to send a detailed report of what had occurred, and would await its
receipt before deciding on their eventual course of action. Meantime sixty marines
had been landed to protect the consulate, which he hoped would be sufficient, but
more could be landed if necessary. Mr. Matsui added that he understood that the
houses of other foreigners had been pillaged besides those of the Japanese. .'Altogether
he appeared to take the affair calmly, and repeated more than once emphatically that
the newspaper excitement was exaggerated.

CONYNGHAM GREENE.

No. 66.

Sir Edward Grey to Mr. Alston.

Sir, Foreign Office, September 24, 1913.

I HAVE to inform vou that I have received a letter from the Armv Council
enquiring whether any reduction may be effected in the present strength (two British
and one Indian infantry battalions) of the North China garrison, and whether the
normal garrison there (one British and one Indian infantry battalions) is likely to be
maintained for a further period of two years at least from the 31st May, 1914.

Before replying to the Council's letter, I should be glad to receive your
observations on these points.

As the Council desire to receive an early reply to their letter, I request that you
■will inform me of your views by telegram.

I am, &c.

E. GREY.

No. 67.

Sir C. Greene to Sir Edward Grey. — {Received September 27.)

Sir, Chuzenji, September 10, 1913.

THl'] Nanking incident, to which I had the honour to call your attention in
my despatch of the 6th instant, has suddenly assumed a somewhat serious aspect
ovA'ing to the assassination on Friday night of Mr. Abe, Director of the Political
Division of the Foreign Office. It seems that Mr. Abe, who is a highly respected
official, and who served at one time as secretary at the Japanese Embassy in London,
was set upon by two young ruffians, who were dressed as students, as he was entering
his own gate on his return home at 7 o'clock. One of these scoundrels seized
Mr. Abe and held him, while the other stabbed him twice in the groin, after which
they both took to their heels. Mr. Abe endeavoured to pursue them, but had to
give up the chase and stagger home, where he died the following morning from his
wounds. The reason which is generally assigned for the murder is an interview
which had been given by Mr. Abe to the " Tokyo Nichi-Nichi," and which had
appeared in the morning papers, with regard to the Nanking incident. In this
interview Mr. Abe is reported to have deprecated the despatch of a special military
commissioner to China, or the occupation of any place in that country, on account of
the incident. It is assumed that his moderation must have offended some hothead who
resented the official attitude, and would have preferred to see the murders of Japanese
and the insult to the Japanese flag at Nanking dealt with in a more summary manner.
Moreover, the vernacular press had been working up a public agitation over the Nanking
incident as well as over two earlier outrages which had been committed against
Japanese officers. Captain Kawasaki and Sub-Lieutenant Nishimura, in the neighbour-

liood of Haiikow. These latter incidents had not unnaturally excited a feeling of
indignation in military circles, with the result that warlike talk was heard. It is not
easy to ascertain exactly what steps have been taken by the authorities, as the news-
papers have been forbidden to discuss the incident, and one or two which had ventured
to report it have been suppressed. It is officially stated that a demand for satisfaction
has been addressed to the Government at Peking. It is impossible, in the absence of
information as to the nature of these demands, to forecast the result, but it seems-
most desirable that the Chinese Government should grant full and prompt satisfaction
if thej' wish to avoid unpleasant developments.

CONYNGHAM GREENE.

No. 68.

Mr. Alston to Sir Edward Grey. — (Received September 27.)

Sir, Peking, September 12, 1913.

I HAVE the honour to transmit to you herewith copy of a despatch from His-
Majesty's consul at Nanking, describing the condition of afikiis in that city subsequent
to the entry of the northern troops.

General Chang Hsun had previously declared that he would permit no pillage or
outrages of any kind to occur after his entrance into the city ; the general, however,
discreetly remained outside for three duys, during which time his troops were allowed
uncontrolled licence. After establishing himself in Nanking on the 4th September,
Chang Hsu II went through the formality of posting up stringent orders and of
decapitating a few of the looters who were caught red-handed, but by that time there
was nothing left to loot.

Considerable excitement has been roused by the killing of three Japanese civilians
and the destruction of Japanese property by Chang Hsun's men at Nanking during the
sacking of the city.

T have, &c.

B. ALSTON.

Enclosure in No. 68.
Consul Tours to Mr. Alston.

Sir, Nanking, September 4, 1913.

I HAVE the honour to report that the condition of affairs in Nanking during the
last thr.'se days, following the capture of the cit}' by the Government troops on the
1st instant, has been truly appalling, and thoroughly in accordance with traditions of
Chinese mediaeval warfare. Wanton murder, looting, rape, and incendiarism have been
the unchecked amusements of the victorious soldiery. This morning General Chang
Hsun entered the city in some state by the east gate (Taiping Mdn), and proceeded to a
yam^M at Nua Pailou, in the south-east centre of the city; there he took up his
quarters. Two or three hours later General F6ng Kuo-chang entered the city by the
north gate (Yi-feng M6u), and took up his quarters at the Naval College, close to this
consulate, in the north of the city. The accommodation is scarcely adequate, however,
and he proposes to move on to the house of the Bureau of Foreign Affairs, some
2 miles further into the city.

The three days' licence to the soldiery has clearly been by prearrangement. Up
to last night hell unrestrained has reigned in the city ; late last night, in anticipation
of the General's entry to-day, proclamations over General Feng's name appeared,
ordering dire penalties against any who might be found looting, raping, or creating
any disturbance after the appearance of the proclamation. The ability to enforce order
has been amply demonstrated this morning ; belated looters have been brought to the
Naval College, and summarily executed in the roadway, their heads then suspended
from the ti'ees in the avenue along the main road.

The three days have provided sufficient time for a complete and thorough looting
of the whole city. Scarcely a stick or a rag remains unlooted. Any who have
protested or have attempted to protect their goods have been ruthlessly shot down.
Persons, even women and children, running away in fear from the soldiers have beea
shot down in the street if they would not stop when called upon.

[1089] H 2

The city is now a scene of desolation ; and the inhabitants, many of them ruined,
are sitting among the debris and the bare walls.

The rebel leaders have escaped ; the rebel soldiers who have surrendered have been
paid off and released ; the whole penalty of the rebellion has fallen upon the luckless
inhabitants and merchants, who almost to a man have been strongly opposed to the
rebellion and all its works.

As I have already reported by telegram, some Japanese civilians were killed during
the disorder in the city on the 2nd instant. The Japanese admiral arrived in port
to-day and proceeded to the Japanese consulate, where, I understand, he is to reside for
two or three days.

The rebels were all driven out of the south city during the night of the 1st instant.
The fighting in that quarter during the whole night was very heavy. The last rebel
stronghold was the Yu-hua-tai fort, outside the south gate. The rebels were informed
that unless the fort was evacuated by noon on the 2nd instant it would be attacked.
The fort was evacuated. All rebels who have escaped in this district and in Anhui
province are reported to be in the hinterland south of Wuhu and Nanking. An officer
of the Government troops told me to-day that their number is estimated at about
10,000.

This afternoon four of General Feng's staft' officers called on me, bringing the
general's card, to enquire whether any British subjects had suffered any damage or loss,
and to express the general's formal regret for the inconvenience caused by the disorder
consequent upon the siege.

Ho Hai Ming and the other leaders seem to have escaped into hiding in the nick
■of time,

I have, &c.

B. G. TOURS.

No. 69.

Sir C. Greene to Sir Edward Grey. — (Received September 29.)

Sir, Chuzenji, September 12, 1913.

POPULAR excitement in connection with the Nanking incident has shown no
sign of abatement during the past week, and indignation meetings have heeu held out
of doors and in public buildings. On Sunday a mass meeting of about 20,000 persons
was held in Hibiya Park, which is adjacent to the public offices and Houses of
Parliament, at which violent speeches were delivered but no hreach of the peace
ensued. The occasion of the meeting was the anniversary of the Treaty of Portsmouth,
when it is customary for a crowd to assemble and demonstrate against what is held to
iave been an ignoble peace for the Empire. On the original date eight years ago a
mass meeting had also heen held in Hibiya Park, when wild scenes of riot occurred in
consequence of the police having attempted to break up the meeting, and it was at
last necessary to proclaim martial law. On the present occasion the authorities had
very wisely instructed the police to absent themselves from the park so that no breach
of the peace occurred. At the end of the meeting the mob rushed to the Foreign
Office, and endeavoured to burst in the strong iron gates which separate it from the
Toad. Stout chains had, however, been fastened round the gates, and the attempt
failed. Subsequently some men climbed the gates and demanded audience of the
Minister for Foreign Affairs, but were informed that there was no one in the Office.
The mob then proceeded to the private residence of Baron Makino, and sought an
interview with his Excellency. Here again the reply was that the Minister was not
at home, and, after hanging about the premises till the small hours of the morning,
the crowd grew tired and returned home. A similar visit was paid to the house of
the Prime Minister. On Wednesday a mass meeting was held in the Meijiza theatre,
at which 3,000 persons were present, and large numbers were turned away from the
doors. At both these mass meetings, and at others of a less important character,
speeches have been made by Members of Parliament and by politicians more or less
in the public eye, but not by any men of special mark. The note throughout has been
dissatisfaction with what is considered to be the weak policy of the Foreign Office, and
a demand for mobilisation and the despatch of troops to occupy strategic points in
China. The attitude of the Government has been calm throughout, and every
endeavour has been made to allay public excitement and to prevent the popular
indignation from getting out of hand. Even free lances of importance, like Mr. Inukai,

Mr. Ozaki, and others, have preached patience, and pointed ont the necessity of
^allowing time for the Chinese Government to deal satisfactorily with the situation.
Of course the Opposition press is very excited, and even vernacular papers, such as
the " Jiji " and " Nichi Nichi," are beginning to show signs of impatience, but the
dailies, which are published in English, are still showing an excellent example. The
agitation in the Opposition papers is ascribed to a desire to turn the Government out
of office.

Yesterday it was stated that a young man, aged IS, had committed suicide, and
that a paper found in his pocket was a confession of the murder of Mr. Abe. I do
not know if this news is correct, but the account given is circumstantial. Another
young man has since attempted to commit suicide in one of the waiting rooms of the
Foreign Office by way of protest against the Ministry for Foreign Affairs.

Mr. Abe's funeral took place without anj- disturbance on Thursday, and was
attended by about 1,500 persons, including the Prime Minister, the Minister for
Foreign Affairs, the Minister of Marine, Baron Kato, Viscount Uchida, all the staff of
the Foreign Office, and representatives of the various embassies and legations.
Extraordinary posthumous honours have been conferred upon the dead man by the
Emperor, including his appointment as Envoy Extraordinary and Minister Pleni-
potentiary to Belgium.

doNYNGHAM GREENE.

No. 70.

Mr. Alston to Sir Edward Grey. — {Received September 29.)

(Telegraphic.) Peking, September 29, 1913.

NA^^KING incident.
His Majesty's consul at Nanking telegraphed to me yesterday as follows : —

" Chang, who called on all the consuls to-day, informed me that a settlement of
the Japanese incident is being arrived at. Chang called on the Japanese consul this
morning to apologise, and this afternoon his troops will follow."

No. 71.
Mr. Alston to Sir Edward Grey. — (Received September 29.)

(Telegraphic.) Peking, September 29, 1913.

NANKING incident.

His Majesty's consul at Nanking reports that, as he learns from the Japanese
consul, 900 of Chang's soldiers saluted the Japanese consulate yesterday, and the
demands of Japan have been complied with. In two or three days the greater
portion of the Japanese landing force will be withdrawn.

No. 72.
Mr. Alston to Sir Edward Grey. — {Received October 4.)

(Telegraphic.) Peking, October 4, 1913.

THE election of the President is fixed for the 6th October and the inauguration
for the 10th October. I propose to recognise the Republic as soon as the election has
been notified to us.

The President's inaugural address will contain a declaration, which has been
submitted to the Diplomatic Body, regarding the observance of foreign treaties.

No. 73.

Sir Edward Grey to Mr. Alston.

(Telegraphic.) Foreign Office, October 4, 1913.

YOU should act as proposed in your telegram of to-day, and also convey to the-
Presideut a congratulatory message on behalf of His Majesty's Government.

No. 74.

Mr. Alston to Sir Edward Grey. — {Received October G.)

Sir, Peking, September 19, 1913.

I HAVE the honour to transmit to you herewith a Pi-esidential Order providing
for the punishment of the persons responsible for the killing of Japanese subjects at
Nanking.

I have, &c.
^___^ B. ALSTON.

Enclosure in No. 74.
Extract from the " Gazette " of September 12, 1913.

'.-)■

Presidential Order.

THE Wai-chiao Pu has presented a report which states that on the 1st September,
after the assault and recapture of Nanking by the Government forces and while the
Government and rebel troops were in a state of confusion, it happened that there were
three Japanese subjects who had the misfortune to be killed, and that, moreover.,
looting of Japanese shops occurred.

The sole object of employing military force on this occasion has been to stamp out
yil-doers, and to tranquillise the well-disposed, and by safeguarding the peace of
Eastern Asia to protect the trade of China and foreign nations. Repeated instructions
have been issued to the officers responsible to exercise the utmost strictness in
restraining their men from alarming the country folk. Yet foreign merchants who are
in a strange land have been plundered, and those who are our guests have been killed.
This is, indeed, execrable conduct, and very greatly to be deplored.

Chang Hsun, Tutu of Kiangsu, is hereby commanded to seek out with all speed
those persons who are guilty of slaying and looting, and to punish them with the
utmost severity provided by martial law. The responsible officers who failed to control
their men strictly must one and all be discovered and severally punished.

With respect to all Japanese merchants who were killed or plundered, Li Sheug-to
is hereby commanded to investigate the circumstances of- the damage inflicted, and to
make good all losses in full. He shall, moreover, express commiseration as is fitting.

The relations between China and Japan have long been most cordial, but they
have been more than ever intimate since the establishment of the Republic. All civil
and military officials in the provinces are hereby commanded to foster this principle of
s^'mpathy, and to pay the utmost respect to all international obligations. From such a
course not the slightest divergence can be permitted which could cause such another
regrettable accident as this to occur. By this means will China's extreme desire ta
deal straightforwardly with a neighbouring nation be manifested.

No. 75.

Mr. Alston to Sir Edward Grey. — (Received October 6.)

Sir, Peking, September 22, 1913.

WITH the fall of Nanking and the suppression of the rebellion in Szechuan,.
which I have had the honour to report by telegraph, the armed resistance of the-
opponents of Yuan Shih-kai would appear to have been definitely crushed. There

nevertheless exists a considerable body of opinion which favours the view that the
collapse of the agitation against the provisional President is more likely to be
temporary than permanent. This view is based in part on the methods employed and
the net results obtained by the northern forces during the recent campaign.

It must,, in the first place, be conceded that the principal weapon used by thc'
Central Government and its supporters has been bribery. No decisive success in the
field was gained by the northern generals nor anything in the nature of a " lesson "
inflicted on the rebel forces. Desultory fighting, in most cases at ranges which render
even the modern rifle innocuous, was followed, in almost every case, by protracted
negotiations, resulting in the fixing of a definite price at which the leaders were
prepared to be " bought off " and the men to disperse after laying down their arms
and receiving a bonus in cash. Both the men of the regular army and the coolies
enlisted for the occasion, w'ho fought on the southern side, have, in fact, learnt nothing
of the horrors entailed by defeat in the field, but have disbanded, impressed by the
pecuniary advantage to be gained by opposition to the forces of the Central Govern-
ment. To the number of some tens of thousands they are now cast adrift in various
parts of the southern provinces, and, failing the unlikely event of their obtaining
work as agricultural labourers, cannot but tend to swell the normal forces of disorder
should peace be maintained or to join the ranks of any future organised rebellion
which may break out.

While the rank and file of the rebel forces have little reason to regret their
adherence to the southern cause, their leaders have at least escaped the condign
punishment promised them in a series of presidential orders which have from time to
time appeared in the " Peking Gazette." While some have been proscribed, and
while a definite price has been placed on the heads of others, none of the more
important have been actually captured and executed. To those who deserted the
revolutionary movement in its earlier days, a certain monetary benefit has doubtless
accrued as the price of their desertion. Others have certainly profited by the forced
contributions from mei'cantile communities which have been reported from aknost
every point occupied by the rebel forces. In view of the considerable financial
assistance which was apparently forthcoming, it is impi-obable that any of the rebel
leaders have sustained serious pecuniary loss, nor, with the exception of the
dispossessed ^Putus and certain high provincial officials who have lost their positions,
have they any more reason than the men whom they lately commanded to regret
their opposition to the Central Government. The rebel Tutus together with the
other more prominent agitators on the southern side are now enjoying the benefits of
a secure asylum abroad, where they will doubtless pursue in peace their efforts to
render the position of the provisional President impossible.

In my despatch of the 28th July, written soon after the outbreak of the
late rebellion, I had the honour to report that there was no sign of the movement
having secured the support of any considerable body of public opinion in China.
Throughout the course of the campaign this has, in fact, proved to be the case. AVhile
the great body of the working classes remained apathetic, the sympathies both
of individuals and corporations connected with trade and commerce were shown
strongly to favour the success of the Central Government. At every point where
hostilities w-ere threatened the influence of Chambers of Commerce and Mercantile
Guilds was invariably wielded on the side of moderation. After hostilities had
actually broken out a number of these corporations actively supported the cause of
the provisional President, and in some cases made the most serious sacrifices in its
defence. If the sympathies of the commercial classes were opposed to political
upheaval before the outbreak of the rebellion, it is certain that these sympathies have
been strengthened by their experiences during its course. Nearly every town which
has been in occupation of the southern forces has been the scene of political murder,
extortion, and looting. In some cases victorious northern soldiery, on entering points
which had been in possession of the rebels, completed the partial ruin already wrought
by their opponents. The general set-back to trade expansion and commercial
confidence, which have been the natural outcome of the disturbances, will be probably
only a temporary phenomenon, but long after normal conditions have been restored
the commercial community will remember their late experiences, and it is safe to
assimie that their influence will continue to be thrown with increasing weight on
the side of a strong central administration capable of maintaining internal order.

At the outbreak of hostilities fears were expressed that general disaffection would
be found to exist among the high provincial officials throughout China. Had the
Central Government been less well supplied with funds, and had its forces suffered an

•early and decisive defeat in the field, it is possible that these fears might have
materialised. In the event they have proved unfounded. The northern provinces
have remained uniformly loyal to the provisional President. The Tutus of Yiinnan,
Kueichow and Shensi have proved the value of their loyalty by despatching troops
against the rebels in neighbouring provinces. In Hunan, Chekiang and Fukien the
high provincial authorities, having declared independence under the stress of force
majeure, took the earliest opportunity of returning to their allegiance, and that Yuan
Shih-kai is convinced of their loyalty is proved by the fact that they have been
confirmed in their positions. Even in Kuangtung and Szechuan sufiicient adherents
of the Central Government were found to suppress the local rebels without serious
assistance from outside. There is no reason to apprehend that the sympathies of the
j)rovincial governors, which have lately been shown as strongly in favour of the
provisional President and his policy of opposition to disintegration, will undergo any
marked change in the immediate future. It must not, on the other hand, be forgotten
that such a change might possibly result should the Central Government fall into a
state of financial embarrassment and be no longer able to dispose of the large sums of
ready money which have lately been employed against the rebels.

There remains to be considered the position of the large numbers of Chinese
youths who have returned from Japanese, American, or European universities, and
who form the nucleus of what is popularly known as the "Young China " party.
With the exception of a very limited number of individuals, who have genuinely
assimilated some branch of Western knowledge and have already taken their place in
the professional life of China, the young Chinaman, who has enjoyed the benefits
of a superficial foreign education, is as strongly opposed to the arbitrary regime
of Yuan Shih-kai as he was to that of the Manchu Empire. He helped to over-
throw the late dynasty, and, having achieved his purpose, finds that he has set up
in its place a Republic which is as autocratic in its methods of administration and
Avhich has as little use for his services as that of the Government which he overthrew.
It is difficult to determine whether any serious part in the late rebellion was played by
the returned student class. It is improbable that any considerable number of them
took the field as active partisans of the southern cause, but almost certain that there
exist ]nauy thousands of Chinese middle-class homes in which a constant propaganda
is being carried on in favour of a genuinely democratic Republic as advocated by
Sun Yat-seu and in opposition to the autocratic Republic of which Yuan Shih-kai is
provisional President. It must also be remembered that the ranks of the " Young
China" malcontents are being constantly augmented by fresh arrivals from abroad,
and that no effort at conciliating this dangerous element has been made by the present
administration.

Under these circumstances, it is probably correct to assume that such weight as is
carried by the majority of young foreign-educated Chinamen will continue to be
thrown on the side of the forces opposed to the Central Government as at present
constituted. The function will doubtless be to keep alive the latent hostility to the
north, which is apparently endemic in the southern provinces.

I have endeavoured to show above that the so-called suppression of the late
rebellion has left in existence elements from which armed forces could easily be raised
for the purposes of a fresh rising, that the leaders of the movement have little reason
to fear, and some direct incentives to hazard, a renewed attack on the Central Government,
and that the success of Yuan Shih-kai in dealing with the troubles has been due much
more to the superiority of his financial position than to that of the forces which took
the field on his behalf.

Before the close of the current year the funds at the disposal of the Chinese
Government will ahuost certainly be exhausted. It is thought by those who favour the
view that no definite or permanent suppression of southern aspirations has been
accomplished, that this moment will be chosen by the opposition forces for a renewed
attack on the Central Government.

To turn from speculations regarding the future action of the soiitheru agitators
to the actual political position occupied by the provisional President at the moment, it
must be conceded that this is stronger than at any period since Y'uan's accession
to power. About the 4th August the first steps were taken by him to overawe his
opijonents of the Kuo Min-tang party, who remained in Peking and continued to fulfil
iheir functions and draw their salaries as members of the National Assembly. Some
days later rumours were current that some form of compromise had been arrived at
betAveen Yuan and the above-mentioned party. Military successes having intervened,
it is probable that the President considered compromise no longer necessary, and

determined to resort to sterner measures. Round about the 20th August it was reported
that numerous arrests were being made among the President's political opponents.
These culminated on the 27th August with the arrest of a number of senators and
deputies belonging to the Kuo Min-taug. For a time there was talk of adopting
measures of retaliation against the unconstitutional action of the President, and a
deputation of the two Houses even went so far as to visit the Winter Palace and ask
Yuan for a categorical statement regarding his intentions of ruling the country with
or without Parliament. It is not known what reply they received, but all opposition
may now be said to have collapsed, and there are signs that the definite election of
Yuan as first President of the Chinese Republic will not now be long delayed.

I have, &c.

B. ALSTON.

No. 70.

Mr. Alston to Sir Edward Grey. — (Received October 6.)

(Telegraphic.) Peking, October G, 1913.

YUAN" SHIH-KAI elected President of the Chinese Republic to-day.

No. 77.
Mr. Alston to Sir Edward Grey. — {Received October 12.)

(Telegraphic.) Peking, October 12, 1913.

YOUR despatch of 24th September.

I would deprecate coming to any decision for reducing garrison in North China
until effect of formal election of President and of foreign recognition of his Government
has been seen, say until the spring of next year. At present martial law still prevails
in many centres in China. Chinese themselves are by no means confident as to political
outlook.

No. 78.
Mr. Alston to Sir Edward Grey. — (Received October 13.)

Sir, Peking, September 29, 1913.

I HAVE the honour to report that the third Cabinet since the establishment of
the Provisional Republican Government was formed on the 11th instant under the
Premiership of Hsiung Hsi-ling.

The country had been without a substantive Premier ever since Chao Ping-chun
went on leave in May last, and the effect of the recent rebellion on the political
parties and the National Assembly rendered an early reconstruction of the Cabinet
mevitable.

The Premier holds the portfolio of Finance, and General Tuan Cbi-jui and Admiral
Lui Kuan-hsun continue at the head of the army and navy, respectively, whUe the
remaining Ministries have been distributed as follows : —

Foreign Affairs, Sun Pao-chi.
Interior, Chu Ch'i-ch'ien.
Justice, Liang Ch'i-ch'ao.
Education, Wang Ta-hsieh.
Industry, Chang Ch'ien.
Communications, Chou Tzu-ch'i.

No appointment has been made to the Ministry of Agriculture and Forestn,-,
which will shortly be reamalgamated with the Ministry of Industry and Commerce.

Hsiung Hsi-ling was Minister of Finance in the first Republican Cabinet under
Tang Shao-yi, and his name will be remembered in connection with the Crisp loan,
which he negotiated after his resignation of that post ; he has recently been acting as
Military Governor of Jehol.

[1089] I

Sun Pao-ch i is an ex-Minister to France and Germany, imd was Governor ot
Shantung up to the time of the revolution.

Chu Ch'i-ch'Ien was Minister of Communications in the last Cabinet.

Liang Cii'i-ch'ao is the best known disciple of the reformer Kang Yu-wei, and was
proscribed with his master after the conp d'Etat of 1898, since when, as a journalist in
Japan, he has advocated the cause of limited monarchy in China.

Wang Ta-hsieh was Minister to Great Britain in 1905, and subsequently to
Japan.

Chang Ch'ien is a noted Chinese scholar and promoter of industrial enterprises; he
also claims to be an authority on salt administration.

Chou Tzu-ch'i, as a member of the old Board of Foreign Affairs, accompanied
Prince Tsai Chen on his coronation mission to England in 1911 ; as Acting Minister of
Finance he was responsible for the Belgian loan of March 1912, since which date he has
been Governor of Sliantung.

The Cabinet, though nominally non-party, is markedly conservative in composition,
and the absence of any member of the Nationalist party and the practically unanimous
acceptance of the nominations by the National Assembly mark the defeat which the
Radicals liave suffered through the suppression of the rebellion which their extreme
wing supported.

The President somewhat boldly claims he has collected a " Cabinet of all the
talents," each member of which will assume his full share of responsibility and make
Cabinet Government a reality, with the aid — incidentally — of a further foreign loan. It
is true he enjoys at present a greater measure of parliamentary support than either of the
previous Cabinets, but the fate of Tang Shao-yi should serve as a warning against
any tendency to ignore the effective power still wielded by the President himself.

The new Cabinet has adopted a policy of administrative retrenchment which,
howevei' necessary, cannot be popular among the hordes of recently appointed republican
officials, and a section of the native press continues to foster the officially denied rumours
of friction between Premier and President, and to hint that the formal election of the
latter, which is now in sight, will of necessity entail the nomination of a new Cabinet
when the Government ceases to be provisional.

In view of China's present difficulties, it is perhaps too much to expect any marked
change in the external policy of the Cabinet, though the prompt acceptance of the Japanese
demands in connection with the Nanking incident may be regarded as a hopeful sign.

When calling on me after taking up their appointments, the Premier and the Minister
for Foreign Affairs and Justicje, each dwelt at some length on the feeling of profound
gratitude entertained by the President and Government of China towards the Govern-
ment of His Majesty for the friendly and sympathetic attitude adopted by us from the
commencement of the revolution, and continued during the recent rebellion, an attitude
which they hoped might still be observed in the future.

I replied in each instance to the effect that the policy of His Majesty's Government
would always be in favour of a strong and stable Government in China, and that our
sympathetic support to this end could be relied on.

I have, &c.

B. ALSTON.

No. 79.
Foreign Offi.ce to War Office.

Sir, ' Foreign Office, October 18, 1913.

I AM directed by Secretary Sir E. Grey to transmit to you herewith, to be laid
before the Army Council, copy of a telegram from His Majesty's Charge d'Affaires
at Peking,* recommending that the decision as to a reduction of the garrison in North
Clhina should be postponed for the present.

I am to inform you that the Secretary of State is entirely in accord with the view
of the situation expressed fjy Mr. Alston, and would deprecate any reduction of the
garrison in the immediate future.

I am, &c.

W. LANGLEY.

* No. 77.

No. 80.

Mr. Alston to Sir Edward Grey. — {Received October 27.)

Sir, Peking, October 11, 191.3.

I HAVE the honour to report that the election of the lirst President of th&
Chinese Republic was held on the 6th instant.

Article 2 of the law for the election of the President states that the President
shall be elected by an electoral college organised by the members of the National
Assembly, and that, for the purposes of the presidential election, a quorum shall be
constituted by two-thirds of the total number of electors voting by secret ballot. Of
the total number of votes cast an absolute majority, amounting to three-fourths, must
be obtained by the successful candidate. This procedure is followed twice, and, in the
event of no decisive result being obtained, a third ballot is held, the candidates being^
limited to the two who headed the poll at the second ballot. On this third occasion a
bare majority suffices for election.

Contrary to general expectation, the proceedings were protracted throughout the
day, and three ballots were required before the provisional President could be legally
confirmed in his office. It had been hoped that the unanimity with which the members
of botli Houses had hurried forward the election, in order to enable the inauguration
to be held on the second anniversary of the outbreak of the revolution, foreshadowed a
similar unanimity in the choice of the President. But this proved not to be the case.
At the first ballot 7;")9 members were in attendance, of whom 471 voted for Yuan Shih-
kai and 1 54 for Li Yuan-hung. The remaining votes were cast for Wu Ting-fang, 33 ;
Tuan Chi-jui, 16 ; Sun Yat Sen, 13 ; Kang Yu-wei, 11 ; and Tang Shao-yi, 5 ; several
others obtained one or two votes each.

Yuan Shih-kai was therefore short by 99 votes of the number required for election,
A second ballot was then held ; 745 members were present, and, although Yuan Shih-
kai received 26 additional votes, he was still 62 short of the requisite majority, Avhile
General Li's votes were increased to 162. It then became necessary, according to the
article of the law qiioted above, to have a third ballot to decide between Yuan Shih-
kai and Li Yuan-hung. In this final ballot 703 members participated, of whom 507
voted for Yuan Shih-kai, 179 for Li Yuan-hung, and 17 voted irregularly. President
Yuan was therefore elected by an overwhelming majority over one who has been the
most loyal of his coadjutors and who has emphatically asserted that he has no
aspirations towards the presidency. The announcement was greeted with outbursts
of applause within and without the Assembly building.

It is difficult to ascertain the reasons for such strenuous opposition. General Li
Yuan-hung, in spite of repeated announcements that he would not accept the
presidency, received the votes of more than 150 members on each occasion, and several
votes were given to other persons who were never seriously considered as candidates,
and who would, in any event, have been ineligible. This attitude of the Assembly Avas
the more unexpected inasmuch as the Kung-ho Tang, or Conservative party, of which
General Li is president, at a trial election held recently, decided unanimously to adopt
Yuan Shih-kai as their candidate for the presidency. Voting being by secret ballot,
it is impossible to ascertain which party in the Assembly persisted in voting for
General Li, but it is generally believed that he received most of his support from the
Chin-pu Tang, who represent what might be called the Progressive party. One
obvious defect of the election was the absence of any formal procedure for nominating
candidates. Members were left absolutely free to vote for any name they liked without
complying with any formality or even observing the constitutional qualifications of a
presidential candidate.

The Minister for Foreign AfEairs notified the result of the election to the foreign
legations the same evening in identic notes, and by the following day all those countries
which had not already done po officially signified their recognition of the Chinese
Republic in the same manner. On the receipt of my note, the Wai-chiao Pu conveyed
to me the thanks of the Chinese Government for the recognition accorded by His
Majesty's Government. The Minister for Foreign Affairs called on me in person on
the 7th instant and also requested that I would transmit the thanks of the Chinese
Government for the action taken by His Majesty's Government in the matter, as well
as for their attitude throughout the course of the past two years.

The election for the vice-presidency of the Republic of China was held on the
7th October.

[1089] K

Unlike the vote for the presidency, only one ballot was required, Li Yuan-hung
iDeing elected by a sweeping majority of 610 out of a total of 719 votes. The
xemaining 109 votes were distributed over about half as many different candidates,
Ohang Hsun and Sun Yat Sen receiving one apiece.

I have, &c.

B. ALSTON.

No. 81.
Mr. Alston to Sir Edward Grey. — (Received November 3.)

Sir, Peking, October 11, 1913.

IN continuation of my despatch of to-day's date, I have the honour to report that
the ceremony of the inauguration of the presidency of Yuan Shih-kai took place on the
10th instant, the second anniversary of the outbreak of the revolution.

The President arrived at the palace grounds at 10'20 in a special state coach, and,
alighting at the foot of the marble bridge in front of the Tienanmen, was carried in a
sedan chair through the inner courtyards into the main court square. Special pre-
cautions were taken against any possible attempt on the life of the President, troops
being lined up to guard all the main approaches within and without the palace.

At 11. o'clock the President entered the hall, in which were assembled the heads
of the foreign missions with their staffs, the chief Chinese officials, and members of
Parliament.

After taking the oath in the following terms : " I swear I will most sincerely obey
the Constitution and faithfully discharge the duties of President," the President read
his declaration, iu which he touched up-^n his former career and sketched the outlines
of his future policy. The main points of his speech were insistence on internal peace,
education, the development of commerce, and adherence to the treaties with foreign
Powers. He hoped to improve the discipline and efficiency of the army and navy by
concentrating his efforts rather on moral training than by trusting to sheer weight of
numbers.

After reading this declaration, copy of which is enclosed, the President retired for
a while, and, when the members of Parliament had withdrawn, returned to receive the
Diplomatic Body, who were formed up in a line according to precedence.

The Spanish Minister, M. Luis Paster, acting as dean of the Diplomatic Body,
read out in French a message of congratulation on behalf of the foreign Governments.
The President replied in suitable terms, reasserting his desire to maintain intact
existing friendships and treaties with foreign Powers. His Excellency then went down
the line and conversed in turn with the heads of missions, who subsequently introduced
to him the members of their staffs.

There now remained only one more ceremony, perhaps the most delicate and
significant of all. In the hall, which in past centuries had witnessed the most brilHant
functions of the Manchu Court, the President of the Republic received the congratu-
lations of the representative of the ex-Imperial family. Prince Pu Lun, or simple
" Pulun " as he was styled in the official " Gazette," attired in the full-dress uniform
of a general, read a letter from the Ta Ch'ing Eniperor, conferring on the new republic
the blessing of the dethroned dynasty.

The President \\ as afterwards carried to the top of the Tienanmen, where were
gathered together the members of the foreign legations, the chief Chinese officials, and
the representatives of the foreign press. Conspicuous among the assembly was the
■once redoubtable General Chiang Kuei-ti, now attired in the new blue uniform of
Yuan's military staff. From this favourable position the President reviewed some
8,000 troops, including battalions of the Imperial Guard, the President's guards, and
the Peking garrison, three batteries of artillery, and a squadron of cavalry, who
marched past to the air of the new Chinese National Anthem played by three military
bands.

In the evening a reception was given in the new Wai-chiao Pu building to the
Diplomatic Body, which was attended by almost the entire foreign community of
Peking.

To-day his Excellency gave a State luncheon to the heads of missions in the
palace of the late Empress Dowager. This entertainment was followed by a garden
party in the grounds of the palace, which was attended by the members of the foreign
legations and by the principal members of the official and foreign community.

It has since transpired that the ceremony of inauguration was nearly marred by
disaster. Major-General Chen Chou-yin, the chief of the Peking Detective Service,
had been suborned by the enemies of Yuan Shih-kai, and, armed with small bombs,
intended to blow to pieces the President and all his entourage. If he had been able
to carry out his purpose at the moment of the taking of the oath, the members of the
Diplomatic Body would have been included in the catastrophe.

Fortunately the General's manner on the previous day in making difficulties
oyer the place assigned to him at the ceremony aroused suspicion, and secret enquiries
instituted at his residence produced ample evidence of his guilt. He was accordingly
handed over to the court-martial, by whom he was sentenced to death. The execiition
was carried out the day after the inauguration.

I have, &c.

B. ALSTON.

Enclosure in No. 81.
Inaugural Address of President, October 10, 1913.

I, THOUGH lacking in ability, have for a g^eneration taken a humble part ia
public life and have ever maintained a moderate policy. It has been my conviction that
the fundamental principle of governance consists in a clearly defined system of
administration and in the strengthening of cardinal principles of morality prior to taking
occasion by the hand in promoting the progress of the masses. For this cause I have
aimed gi-adually at introducing such reforms as would make for public enlightenment:
at the same time, I have preferred conservative to extreme methods for the reasons that
the fate of this State and people must not be staked on a single hazard of the dice and
that immemorial traditions and precepts must not be lightly swept into oblivion.

Four years ago I retired to my estate and in the occupations of husbandry severed
all connection with public life. The ambition of my career to save the country had
vanished like a passing cloud rack or an eddy of smoke. But upon the outbreak at
Wu Ch'ang I was forced by circumstances to bear the brunt of the storm and owing to
alarm lest ruin should overtake my country and fellow- citizens I sought a way to
mitigate their distress. Thereafter, the Manchu Emperor abdicated the throne and the
republic was established when the five races of China did me the honour of election to
the provisional presidency. There is nothing to wonder at in this form of government,
which existed in embryo in China 4,000 years ago. But my exercise of authority has
been so hampered by obstruction that all progress has been frustrated. Anxiety has
been my companion, early and late and sleep and appetite have deserted me. Yet have
I borne with all in the patient hope that a peaceful settlement might be achieved.
Nevertheless, in July of this year a handful of demagogues sought to overthrow the
Union and to destroy the State ; the very existence of this infant republic of East Asia
was trembling in the balance. To save the nation and people it became my bounden
duty to put down the rebellion by force. Happily, the country was sated of anarchy
and the army did its duty, so that the rebellion collapsed within two months. It was
then my purpose to retire to my estate and for ever enjoy the blessings of a republican
Government. But the National Convention has elected me to the Presidency and the
friendly Powers have accorded recognition on the day of my election. It would have
been unbefitting ibr me to follow an ideal of false modesty by refusing the call, lest the
foundation of the nation should be shaken and I should prove false to the trust imposed
by my fellow-citizens. For I too am a citizen of China and the one object which I have
at heart is to save the nation and people. Success or failure is beyond my ken : I am
indifierent alike to hardship or calumny. This is why I have felt bound to take office
and wish now to speak to my fellow-citizens in a spirit of earnestness and good-will.

European scholars have said that a constitutional Government must needs respect
the law and a republic morality ; that is to say, morality is the fundamental principle,
while law is its practical manifestation. If we would raise our people at one bound to
the standard of citizens of a republic we must needs avail ourselves of law to support
morality. Learned men from France, America, and other countries have assured me
that the true definition of the word republic should be : " That form of Government
which is founded on the wishes of all to provide a complete system of law which shall
be faithfully observed, while licence which transgresses the law shall be avoided with
loathing." Such a law-abiding habit may only be acquired by degrees, till it become
second nature, even as the limit set upon the appetite or the seasons for labour and
[1089] K a

repose. Then only may a nation deserve the name of law abiding. Our people are
most docile by disposition but they lack this law-abiding habit. I would fain see one
and all keeping the law of the land until ingi'ained habit raises their morals imper-
ceptibly to a higher plane.

Again, in a republic the people are the controlling force. The vast majority desire
only to live in peace and to follow their avocations. But since the revolution they have
been exposed to manifold tribulations, and one grieves to think of their plight. It has
been my constant desire to restore them to their wonted prosperity, and I have avoided
any measure calculated to induce disturbance. It is to me a source of keen regret that
no precautions should have availed to restrain the rebel mob, and that in consequence
innocent citizens should have been the victims of their poisonous ravages. 1 propose to
devote the whole of my strength in enabling the people to enjoy the blessings of a
republic, so that the ideal of the attainment of happiness may be attained.

The difficulties of gaining a livelihood have so increased that the people liave been
reduced to diie extremity, and cunning rebels have availed themselves of their plight
to lead them to undoing. Most surely they deserve our compassion ! In order to attain
permanent order in a State the citizens must all possess a means of livelihood. Such an
object may only be gained by devoting special attention to agriculture, industry, and
trade. It is said that in civilised countries the best men are engaged in industi-ial
puri^uits. The climate and resources of China are not inferior to those of other nations,
but cultivation and cattle breeding have been undevelope.(l and industrial efficiency is
-wanting. Our mines and fisheries are neglected and their treasures left undisturbed.
Trade is not encouraged, hence our exports steadily dwindle. We are like a rich man
who buries his wealth in the earth and daily bemoans his poverty. I would fain direct
the attention of the people to industry, so thcit the sources of wealth may be increased
and livelihood facilitated. You will then have a firm foundation. There are, however,
two reasims why industry has not developed : firstly, owing to education having
remained in a rudimentary stage, and secondly, owing to lack of capital. Every
department of industry is related to science, yet we have paid no attention to physics,
chemistry, steam, or electricity. While other>i are engaging in the struggle for
education or trade, we have obstinately adhered to antiquated systems, and made a
fetish of empty theories. I should like to see the introduction of enlightened foreign
■educational methods in China. Everi in the region of politics and law, practice, and not
theory, is needed. Without capital the development of industry is impossible. In
view of the fertility of our soil and the abundance of our productions, no one can fairly
call China a poor country. Raiment, food, and lodging ax'e all that humanity needs,
and silver and gold are merely counters. But shortage of money implies lack of the
medium of exchange, for without gold and silver the necessary counters are unavailable.
Thus, in order to develop industry by means of the necessary capital, we must needs
have recourse to our neighbours who possess an ample supply of the medium of exchange.
When the resources of the land are exploited, there will be no waste soil and no
unemployed. Hence after repayment of loans a surplus will accrue out of the gains
made on the original capital. This is surely preferable to burying one's treasure and
then bemoaning one's poverty ? Hence I am anxious for the influx of foreign capital
in order to develop our industries.

The introduction of foreign civilisation and capital is a cosmopolitan as well as a
national policy, for the essence of world civilisation is simply to supply the deficiencies
of others from our own surplus, so that society everywhere may benefit. Divisions
between countries thus practically disappear, as Confucius meant when he spoke of
universal harmony. China is now a republic and must rid herself of the antiquated
notions appertaining to her period of seclusion. Our citizens who obey the law of their
own land must needs know also the law which all nations hold in common. In all
their intercourse with other nations they must beware of any prejudice towards
foreigners in violation of right principle and resulting in severance, but must behave
after civilised standards.

The attitude of foreign Powers towards us has of late been pacific and just ; as
occasion arose, they have often rendered us assistance, and while this affords an
evidence of the civilisation of the world, we are none the less grateful to the friendly
Powers for their good- will. It is essential that our citizens should appreciate this point,
and make a point of consolidating international friendships by manifestations of
sincerity. I hereby declare that all treaties, conventions, and official engagements
contracted by the former Manchu and the Provisional Government with foreign
Governments shall be faithfally observed, also that all contracts duly concluded by
the former Governments with foreign companies and individuals shall be strictly

observed, and further that all privileges, rights, and special ir)aiK,uniti<>a, enjqyed by
foreign subjects in China by virtue of international engagements, national enactments,
and established precedent are hereby definitely confirmed, so as to promote international
amity and maintain harmonious relations. Our people must recognise that this is
nothing less than a duty in international relations, since proof of genuine amity on our
part must needs conduce to the exercise of mutual courtesy.

Such, then, are the main points of the declaration which I am making to the
nation, but in order to amplify my meaning in the widest sense only one word is
needed, namely, "morality." This word is so comprehensive that even the greatest
sages have failed to exhaust its whole significance in thousands upon thousands of
Avords, but what I understand by the term may be briefly comprehended under the four
characters, loyalty, trust, steadfastness and sobermindedness.

The original meaning of loyalty is loyalty to the State and not to the individual.
Only by making the stand of his loyalty the country and not confining it to one
individual or House, can one assure the benefit of the race in preference to personal
considerations of advantage. The pursuit of power must be disregarded and duty made
the paramount consideration. The interests of the State must not be sacrificed for the
selfish interest of one man.

Confucius said : " Without trust no nation can stand." Civilised nations look
upon deceitful conduct with contempt and the stigma is even as a flogging administered
in the public square. Washington, when a lad, thanks to his father's discipline, never
uttered a lie. In the past China has always laid stress on trust and righteousness, but
of late a sad degeneracy has set in and wild exaggeration has become a second nature.
Without trust no man can stand upright : how much less a nation ! Tseng Kuo-fau
under the late dynasty remarked : " The foundation of conduct is to tell the truth."
Therefore trust is necessary in all our relations of life. What is steadfastness ?
Civilised countries spare no pains in preserving their national traditions and without
impeding their advance on the path of progress will not allow a name or an institution
to pass into oblivion. For China Confucianism has always been a great moral safeguard
and the changes and chances of 4,000 years have certainly left the essence of the doctrine
secure from the ravages of time. But there are those who are deluded by theory and
lightly forsake their own heritage. They Indulge in high flown catchwords wittiout
accomplishing any practical result ; while abandoning their own national traditions they
fail to acquire a single good quality from abroad. Frivolity of character spreads like
a new disease. When the root is destroyed, where shall the leaves find place to grow ?
The remedy, then, is steadfastness.

What is sobermindedness ? " To possess a constant occupation one must needs
have a constant mind." In time of emergency be who is devoid of constancy will lose
his presence of mind, whilst at ordinaiy times he is b«set by sloth. In the discharge of
his duties an atmosphere of sluggardness is never absent, and an easy nonchalance will
frustrate the execution of every design. No man will assume responsibility, but will
readily play the part of the supercilious spectator with sarcastic comment. Even one's
own duty is ignored as if it were not one's concern. It is then that we can appreciate
the full flavour of the ancient adage regarding sobermindedness in business. Truly, to
rid ourselves of sloth and pride sobermindedness is needed.

I solemnly pledge myself to make these four words my own ideal and to impress
them upon my countrymen. May we ever bear them in our minds and keep them on
our lips, for no nation can stand save upon the eternal verities which determine right
and wrong. However personal tastes may differ, there is an immutable standard of
conduct which is embraced by the gentr-al truth that he who does his duty and abides
by the law is virtuous, while he who transgresses propriety and principle is evil.
Would that my fellow-citizens may distinguish between them ! It is often said that
the advance of civilisation is accompanied by a tendency toward extravagance. Were
this country, in its extremity of weakness and poverty, to imitate other nations in their
extravagance but not in their civilisation, it would be as if a sick man were to engage
in the lists with an athlete. Of recent years the standard of living in China has
steadily increased, while wealth has diminished in like proportions. The adage has it
that when the State becomes extravagant frugality must be inculcated. I can but hope
that my countrymen will not neglect the duty of frugality as a branch of morals.

In conclusion, if law and morality go hand in hand, this republic will stand on a
sure foundation. Respecting the problem of National Defence, China stands in sore
need of a period of recuperation and the moment for an armed struggle is not yet. I
would, however, fain hope that the army and navy will regard obedience to orders as
their obligation and the protection of their fellow-countrymen as their first duty. Every

officer I'ieaiisie]^' this ifadt instinctively, yet the recent tide of rebellion has largely swept
away obedience to these two principles, and in this respect 1 feel that I have failed to
exercise a full measure of control. Henceforward, I mean to pay the fullest attention
to moral education so that I may not be ashamed to confront my fellow citizens.

Therefore, with the fullest earnestness and good will I declare solemnly to my
feUow-counti'ymen : "As long as I remain President, so long will I perform my duty.
The Republic of China belongs to her 400,000,000 citizens. When brethren dwell
together in unity, a family prospers. If the whole nation unites in a common purpose
the State will be great. Such, then, is my prayer for the Republic of China.

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UNIVERSITY OF CALIFORNIA LIBRARY

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Full text of "China. No. 1 (1914). Further correspondence respecting the affairs of China. "

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